Public Bill Committee

[Sandra Osborne in the Chair]

Clause 49  - Service to be performed with reasonable care and skill

Amendment moved (this day): 47, in clause49, page30, line8,at end insert—
‘(1A) This requirement shall apply to all activities associated with providing a service including—
(a) the management of information held by the trader about the consumer gained in the course of this contract,
(b) the communication with the consumer regarding the contract including activities by the trader designed to induce the consumer to purchase further goods or services from the trader,
(c) for the purposes of this Act this shall be taken to include a requirement for traders to prove they have the direct consent of a consumer to share information on consumers gathered for the purposes of providing a service with any third party including, but not limited to, marketing and communication purposes, and
(d) the trader will be liable for compensation for any distress caused by such activity undertaken involving communications with the consumer via either themselves or a third party without this consent.’.—(Stella Creasy.)

Stella Creasy: I welcome everyone back to a rather chilly Committee Room this afternoon. Given that we all now know our statutory rights quite well, I am sure that everyone is determined to complain, but we hope that it will not take 30 days to fix.
The hon. Member for Gillingham and Rainham was asking some questions about the tribunal decision, which I have with me should he wish to peruse it.

Rehman Chishti: The point I was making earlier was this. The hon. Lady said earlier that the criterion applied by the tribunal to reverse a decision was that there was no substantial distress. That being the case, is she saying that the criterion should change from “substantial distress” to simply “distress”, so that there is greater fairness and clarity?

Stella Creasy: What we are trying to do with the amendment is slightly different. It is about where the detriment occurs and who can complain.
In tabling the amendment, we seek to understand whether we can establish responsibility on the person who has taken someone’s data for the purposes for which they are then used, and establish whether they have looked after those data with reasonable care and skill. Consequently, we would not get the kind of rulings that the Information Commissioner’s Office is having to deal with, where it needs to prove that there has been substantial distress even though it has evidence that someone is misusing information.
The focus would be put back on how the trader has used information, rather than the onus being on the consumer—or the body acting on behalf of consumers, such as the ICO—to prove that substantial distress has occurred, even if they have evidence that someone has broken the rules. The ruling that I mentioned shows clearly that the company had broken all the ICO's guidance and protections. However, because the tribunal said that there was no evidence of substantial damage or distress, it overturned the fine.
Through the amendment, we are trying to enforce the law; the law is not new. Companies should be acting in a certain way if they are abiding by the Data Protection Act. The fact that they are not doing so on such a widespread scale is why we think we should amend the Bill and approach the problem from a slightly different direction—the rights of the consumer on an individual basis. After all, it is all of us, as consumers, who are getting such messages.

Rehman Chishti: I would like some clarification. Lowering the threshold from “substantial distress” to simply “distress” could avoid similar judgments in the future. I am trying to look at the basic principle; I know what the judgment is. What I am saying is that, if the use of “substantial distress” led to the reversal of a decision that should not have been reversed, why not simply change the criterion to simple distress, which would allow everyone to get redress at a lower threshold?

Stella Creasy: The hon. Gentleman’s point relates to for how the law on the ICO works. One problem is that it has to prove that even simple distress has occurred. There is an interesting question for us about whether the ICO is able to act on our collective behalf, which is what it was doing by bringing the complaint.
The chamber president said:
“In our judgment the effect of the contravention is likely to be widespread irritation but not widespread distress. Given the scale of the contravention, there is the possibility of some distress in very unusual circumstances but we cannot construct a logical likelihood of substantial distress as a result of the contravention.”
That kind of confusion—dancing on a pin head, essentially—about what the company did, which clearly contravened data protection laws, is where the detriment occurs. It might mean that the ICO has to find every single customer who has received one of those text messages to prove that widespread distress has been caused by receiving them.
The judgment also mentions “irritation”. “Irritation” is a bit like “reasonable”, is it not? Whether someone is distressed by their irritation, or just frustrated by it—

Kwasi Kwarteng: Vexed.

Stella Creasy: Indeed. The hon. Gentleman is taken with the word. We are going to have a semantic afternoon, which I very much welcome.
All these problems would cause most of our constituents vexation, irritation and indeed distress. What they really want is to see an end to nuisance text messages and calls. Everybody in this House agrees that we should try to deal with them. The question is, is there a better way to help with enforcement of the law? The way in which data are collected through a service—which, after all, is where such data originate—is a good place to deal with this issue. We are asking a good question about the reasonable care and skill that any trader should demonstrate when they take someone’s data and do something with them. If we establish a test of reasonable care and skill in the management of data, it becomes the responsibility of the trader, not the consumer, to prove that it has not been transgressed. That is what we are trying to do, and it would give the Information Commissioner stronger powers and give clearer direction to such tribunals when people do complain. After all, there were complainants who brought the original case about such text messages. The amendment would provide stronger powers to say that this issue needs to be dealt with, and it would send a much clearer message to companies that they should comply with data protection law, which is all we are asking them to do.
I stress: this is not about a new right, power or form of law. The current data protection laws are being wilfully ignored by some companies, and such text messages are resulting in a huge amount of consumer detriment.

Rebecca Harris: Would the hon. Lady’s proposal affect the text message I received this lunchtime? It said:
“Records indicate you were involved in a non fault car accident in the last 2.5 years. As such you are entitled to compensation.”
That is inaccurate data: it was not a non-fault accident; I was personally to blame. So this text message is not helpful to me, but it would be much more helpful to the person whose car I hit. How would the hon. Lady’s proposed change affect such a situation?

Stella Creasy: Let me start by recognising the hon. Lady’s honesty about the accident she had, which is important. I do not know whether some of these companies are listening to our debates and showing how little concern they have for data protection. The question she should be asking is, how did they get her number in the first place? After all, I am sure her number is not in the public domain. She perhaps gave it to her insurance company in the course of dealing with her accident. The question then arises of how it used the data she gave them, and how that information ended up with a third-party organisation that is telling her— erroneously, as she points out—that she is entitled to compensation.
There are very real questions that all of us, as consumers, would have in such situations. For example, if we gave our car keys to somebody else to look after, and found that a third party had them, we would want to hold the person we gave them to accountable for passing them on, whether we had given them permission or not, because the question arises: what will happen to our car as a result? We should see data as a resource, in the same way. The amendment would hold culpable the person who handed over someone’s data without their permission, resulting in their receiving all those messages.
I hope that the entirety of the message received today by the hon. Member for Castle Point is on the record. Many of our constituents receive such messages. They are told that they are entitled to payment protection insurance payments, or to compensation. Usually, the number given in such messages is on a premium rate line—an issue we will discuss later in the Bill. This is really about gaining money from the consumer.
We all recognise that such practices are not acceptable. The question is whether we can do something about them. The first point is whether we see this as a consumer rights issue. The Opposition do, because people have a right to expect their data to be used with reasonable care and skill. The second point is whether this is the right way to deal with the issue. We are happy to listen to the Government’s arguments, but we do think that the Bill should be a vehicle to enable progress to be made on tackling nuisance calls and text messages. That the hon. Member for Castle Point has received one today shows that this problem affects anybody and everybody in the UK. The message we are sending today—not through a text message or, we hope, unsolicited—is that there are ways to amend the Bill to deal with the problem. We can certainly tell Government Members where we obtained their data to enable us to communicate with them, because we ourselves, as MPs, would be held accountable under the Data Protection Act.
If most companies can abide by the law and not pass on information, or are willing to seek the consent of consumers via an active process of consent before they do so, they should also be able to prove that they have done that. That is what the amendment would require, instead of a consumer having to go to the ICO to say, “I’m getting all these messages and it’s causing me huge distress as I can’t stop them. Can you help me?”
We are talking about situations in which people have to change their phone number or not pick up their phone—that is what the father of my hon. Friend the Member for Edinburgh East is having to do—so surely it cannot be beyond the wit of the House to change such companies’ behaviours and introduce proposals about how data is managed that put the consumer and their needs and rights at the heart of the process. That is what the amendment is intended to do.
I am looking forward to hearing what the Government have to say, because I think there is a general consensus that the situation needs to change. I hope that they will recognise the spirit and intention behind the amendment. We will happily work with them to get this right, but what we will not do is let the matter rest. All of us who look at our clogged-up inboxes, listen to the phone ring or hear that irritating beep as an automated message comes in, know that something has to change. I hope to hear from the Minister shortly a proper response on these points.

Jennifer Willott: I shall deal first with the amendment, and then move on to the broader issue of nuisance calls.
The Bill is intended to achieve the right balance to ensure that consumers can have confidence in the services that they contract for in respect of the sharing of data. The Bill provides that balance through the “reasonable care and skill” test, which comes from the Supply of Goods and Services Act 1982. As I said during the debate on a previous amendment, the test is well known and understood by consumers and businesses. The amendment would add to that test, but we know from stakeholders that changing the test would add complexity rather than simplify the law in this area.
Both businesses and consumer groups have told us that they do not want to add complexity by changing the test. For example, the Finance and Leasing Association told us that the text as drafted
“provides consumers with adequate protection and businesses with a clear marker of the level of service they are required to deliver to meet their legal requirements”.
Of course, everyone agrees that consumers’ personal data should be protected—that is a given—but consumers’ rights about the collection, processing and disclosure of personal data are covered by the Data Protection Act 1998, to which the hon. Member for Walthamstow said that I would refer, and enforced by the Information Commissioner. The DPA regulates the disclosure of personal data as well as the storing of it, to ensure that an appropriate degree of protection is given to individuals’ information.
The hon. Member for Walthamstow also mentioned the principles that the Data Protection Act applies to organisations that are processing personal data. Those principles are designed to ensure that personal data are, among other things, processed fairly, lawfully and securely. For that to happen, there are various conditions with which a business needs to comply, one of which is that the person in question has given their consent to the processing. There are also criteria about whether the processing is necessary for the performance of the contract, and they state that it is necessary to comply with legal obligations and so on.
The Data Protection Act already lays down clear rules, but we all recognise that the broader issue of nuisance calls is a serious and growing problem. Tackling nuisance calls is a priority for the Government. We all have constituents who are affected; in fact, probably all of us are affected. My hon. Friend the Member for Castle Point just gave us an example, and I am registered with the Telephone Preference Service, but every weekend when I am back at home I get international calls, even though I do not have that many friends who live abroad. Clearly we are all victims of such problems.
The problem is that there is no simple quick fix. Many things have been tried over the years, so we are pursuing a range of options for reform that are both legislative and non-legislative, in an attempt to have an impact on the volume of nuisance calls. Significant work has been done over the past year or so, and it is starting to generate results. For example, there is much better signposting, with clearer advice for consumers about what to do with nuisance calls. There is a much simpler complaints process, which I have used. The ICO system is simple and easy to use to complain. Trying to encourage constituents to report people who make nuisance calls is helpful. A lot of work is being done to improve call tracing.
We are looking at greater use by the regulators of their powers to issue substantial monetary penalties to companies that break the law. If we want to stop companies making such calls, hitting them in the pocket is one of the most effective ways to get them to change their behaviour. The hon. Member for Walthamstow mentioned that the penalty that Ofcom could impose was increased from £50,000 to £2 million. That is an enormous increase. Ofcom can now fine companies serious amounts of money. The ICO can now impose a penalty of up to £500,000 for the first time.

Andrew McDonald: I am listening attentively to what the Minister says about the range of available solutions. We have heard about unsolicited text messages that relate to road traffic accidents. Perhaps those texts could be reduced by asking the Association of British Insurers to encourage its members to stop the practice of third-party capture, because they are generating those unwanted and unsolicited texts, while the ABI is complaining about the alleged compensation culture that it is helping to generate.

Jennifer Willott: A lot of work has been done on PPI-related texts. The claims management regulation unit, which sits in the Ministry of Justice, looks at the claims management companies—the primary issue that the hon. Gentleman raises—and it works closely with the ICO, Ofcom and other relevant bodies to detect and punish those who are involved in this unacceptable process.
From June last year, the unit started to publish the names of companies that were under investigation and those that were subject to recent enforcement action, to try to name and shame them and encourage a change of behaviour. That is part of the ongoing work to try to improve industry standards. The hon. Gentleman has a point: there are some reputable companies, but an awful lot behave illegally.
More work is being done on the better sharing of information between the regulators. Another issue that is being looked at is what scope there is to lower the legal threshold for enforcement action, which could well make a difference. In relation to the issue that the hon. Gentleman has raised, we are looking at the accreditation of the companies that make calls to see whether we can tackle the issue from both ends: accrediting those who make such calls and naming and shaming those who behave inappropriately. We are also considering consumer consent to clarify that issue.
Ofcom is looking at how effectively the TPS is protecting consumers. Its research is due to be completed by this spring. The Government will review the findings and consider what action needs to be taken to try to tighten up that system. As I said, my experience of being registered on the TPS is that an awful lot of calls are made from international numbers. As people who are registered with TPS know, international calls slip through the net.

Sheila Gilmore: Do not other calls that do not necessarily come from abroad slip through the net—for example, when a survey is being conducted and the caller says, “I just want you to answer a few questions.”?

Jennifer Willott: That is true. I do not suggest that this is the only problem, but a particular issue with the TPS is that a lot of calls from this country are screened out but international calls are not. From the autumn, BT will be able to display international numbers, rather than simply the word “international” being shown on caller display. That will make it easier for people to report companies that are in breach of the TPS rules and for action to be taken, which is difficult at the moment.
There are significant technological challenges. For example, technology that allows numbers to be spoofed for legitimate purposes can be misused for nuisance call purposes. We are working with regulators in the industry to see how that issue can be addressed. There are no easy answers on this issue; it is very complex to sort out. DCMS is looking at potential solutions, both legislative and non-legislative, as I have said, and further details will be provided. An action plan with more details is due to be published very soon.
A number of people have raised the issue of distress. That is one of the issues that DCMS has been considering as part of its examination of how to address the issue of nuisance calls. The Government are working with MPs in the all-party group, as the hon. Member for Walthamstow mentioned, and with consumer groups, the industry and the regulators to try to identify the most effective solutions and the way to tackle this issue. So a lot of work is going on looking at the different ways we can approach this problem to reduce the number of calls. I appreciate that it is an issue that bugs pretty much everybody. As constituency MPs, we see that it is an issue that comes into our postbag a lot. The Government are taking a lot of different actions in different areas. I hope that that reassures hon. Members that we are taking the issue seriously and think it needs to be tackled. I hope the hon. Lady will withdraw her amendment.

Stella Creasy: I thank the Minister for her response, because it is good to see that there is agreement that we need to tackle this issue. The challenge for all of us is that, given that there is general agreement that this is causing consumers detriment, why would we not try to do something about it in a Bill about consumer rights? Why would we not make sure that people have a right to have their data managed properly? To quote the Finance and Leasing Association—a trade body that represents a large number of payday lenders, who are particularly proliferate in this kind of behaviour—as an example of an organisation speaking sense about how we manage data is not necessarily the best example. However, I am interested in the Minister’s brief mention of the fact that the Government are looking at the question of consumer assent.
The amendment looks at the question of consent from a consumer perspective. I would be interested to hear more from the Minister about what issues around consent the Government are looking at, because, after all, this amendment is precisely about that issue. If the Minister could assure us that the questions that are put in this amendment, particularly about the way in which information is managed from the consumer and the requirement to seek consumer consent to pass on information, that would be very welcome. If the Minister says that the TPS is not working for her—we have all confidently told people to register their numbers so that they can have that protection—we are now openly admitting that companies are flouting it.
One of the important matters for me is the ruling from the ICO. Naming and shaming does not seem to be working, partly because there is so much money to be made. Enough people are responding to these text messages and calling the numbers at premium rates that companies are making the money needed to cover any possible fine. Fines are then being overturned on the basis that there is no real distress, because people are putting up with these problems, rather than society getting to grips with the fact that companies are essentially breaking the data protection rules. Are we missing an opportunity to give consumers the protection that consent provisions could offer?
I am very happy to look again at how we might do that, but we want some assurances and some more detail from the Minister about the issues of consent that she is looking at and where that might fit into a consumer rights ethos. After all, this is about people’s right to have their data used in an appropriate fashion. It would be helpful to the Opposition if the Minister could set out more about the issues of consent that the Government are looking at.

Jennifer Willott: That is one of the issues that are being examined in the action plan, which, as I have said, will be coming out shortly. The action plan may come out in time for us to revisit the matter on Report. By that point, or certainly by the time the Bill has come back from the Lords, we will have a clearer picture. Once the action plan has come out and hon. Members have had a chance to look at it, some of the issues the hon. Lady is concerned about may be addressed, so it would be more appropriate to take up anything outstanding at a later stage.

Stella Creasy: Sure. That is helpful. The Opposition would be happy to withdraw our amendment for the moment on the basis of a general agreement that companies should be responsible for doing data management with reasonable care and skill; that consumers should therefore be able to raise concerns under consumer protection law if they feel that a company is not behaving in that way; and that we will get more information about what that might mean for consumer consent from the report that the Minister is talking about, with a view to possibly returning to the issue.
We would certainly be keen to see the issue come back to the House. If the Government have good ideas, as I said, I pledge that the Opposition would be happy to support them on that, but the idea that consumers need to be asked about how their data are being used is an important principle and an important right. We tabled the amendment on that basis. I am happy to withdraw it based on the Government’s assurances that they are looking at those issues and that they agree with us that this part of consumer legislation needs to be dealt with. I am sorry that the matter was not covered in the Bill originally, which would have given us more time to look at how such a proposal would fit in with other rights such as how a consumer might say, “What is the test for a reasonable use of data and care and skill?”
However, getting some progress on the issue at all in the Bill would be welcome to us. If that is what the Minister is offering us, we will be happy to hear more about it later on in the Bill’s progress. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 49 ordered to stand part of the Bill.

Clause 50  - Information about the trader or service to be binding

Stella Creasy: I beg to move amendment 40, in clause50,page30,line18,at end insert—
‘(1B) Prior to the provision of the service or agreeing the contract, whichever happens first, the trader will explicitly provide the consumer with relevant details of their statutory rights under sections 51, 52, 55 and 56 of this Act.’.

Sandra Osborne: With this it will be convenient to discuss the following:
Amendment 41, in clause50,page30,line18,at end insert—
‘(1C) The trader is required to provide full details of the total cost of the service prior to sale including any additional service fees or charges that could be incurred by the buyer in purchasing the service.
(1D) The information set out in subsection (1C) should be portrayed prior to sale and the explicit consent to purchase the service at this price sought prior to sale.’.
Amendment 42, in clause50,page30,line22,after ‘trader’, insert ‘with equal prominence and’.
Amendment 49, in clause50,page30,line31,at end insert—
‘(4A) Where the trader seeks to change any of the information set out in subsection (3) after a contract has been entered into by a consumer, the trader must—
(a) ensure that if the consumer does not wish to agree to the changes sought, the consumer is able to terminate the contract without incurring financial detriment; or
(b) offer the consumer an alternative contract with a comparable financial outcome for the consumer of the existing contract.’.

Stella Creasy: I do not particularly want to spend a great deal of time on the amendments, simply because we have debated in a number of different ways the kind of information that people should be provided with at a point when they are seeking to commission a service. The question of point-of-sale information has vexed a number of members of the Committee over the course of our sittings.
Amendment 40 is about the point-of-sale information that someone should receive should they commission a service. The Opposition are interested in—in fact, we await with baited breath—what the implementation group will come up with on these questions, but we wanted to provide an opportunity to ensure that the requirement is statutory, so that all service providers would have to give the point-of-sale information that we all think is important. People are told that they have statutory rights, but the perpetual question is what their statutory rights actually are.
The amendment is an attempt to introduce the provision that people should have information about what their rights are when it comes to services. Given that people’s rights will be different from those for goods, we think it is right to have different information for service contracts, particularly on the right to repeat performance and the right to a price reduction. It is about that sort of information, to reassure the hon. Member for Wycombe, who I know is desperately concerned about extending contracts to hundreds of pages. We do not think that that would be particularly onerous information to provide. We think it would be helpful to provide that information, especially given the different remedies that the Bill sets out, which is why we have tabled that amendment at this point.
Amendment 41 is another example of an issue that we have had similar debates about. The concept of the information someone would get on total pricing is perhaps even more pertinent when it comes to services than goods, simply because people are more likely to enter into a concurrent agreement in a service contract than they are in a one-off goods purchase.
The amendment is about total cost information and the total cost of a service. Given that the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which the Minister talks so clearly about and is so determined will make such a difference, state that
“the total price of the goods or services inclusive of taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated”
should be displayed to consumers, we think that it is right to say that consumers should have the total cost of a service contract to be able to assess whether they are paying a fair price. After all, the Bill discusses people being able to have a fair price; how do they know they are paying a fair price if they do not have the information about what the total cost of a contract will be?
As somebody who has been campaigning on the total cost for payday lending, I would have loved to see people having an honest assessment of how much a payday loan would cost them at the point at which they might commit to one. I think the figure would have been different from what they had been told in the shops. When I went into some of the shops to do mystery shopping, I was told a number of different costs for that service. The Minister may say that that is an argument for the FCA, but the point that people may commission a service and find all sorts of extra charges and variations being added in, which may substantially affect the cost, is pertinent.
I will give some examples that are not related to the payday lending industry. Someone takes their car to be serviced, and the garage charges them extra to return the car afterwards or to clean it, even when the consumer has not contracted with them to do so. The trader may try to argue that it is all part of the service, although it is an additional service, and try to charge them for it.
Consumers may end up paying hidden charges on services such as insurance, energy or premiums on their credit card. Anyone who has switched to a paid-for bank account may find themselves incurring all sorts of additional charges on their bank account. It is not necessarily a bad thing that people are being charged for certain services—it is for the consumer to decide whether they want to pay the charge for each individual service—but the consumer should have the information to enable them to decide whether a charge is fair.

Stephen Doughty: My hon. Friend makes an interesting point. I was contacted a couple of days ago by a constituent who was concerned about the increasing use of continuous payment authorities. She had purchased services from a company in minute amounts, but for which a continuous payment authority had been issued. She believed that money for things for which she had not consented to pay had been taken from her account. That seems to be an increasing problem in such situations.

Stella Creasy: My hon. Friend is absolutely right. His constituent’s case may relate to amendment 42, which is about small print. It deals with charges that people may incur but which traders may not specify prominently as being part of the cost. We had a debate in an earlier sitting about tickets, booking fees and additional fees that were sometimes imposed for using a debit or credit card. People do not expect to pay those additional fees, but because they are two thirds of the way through the transaction, they end up paying them through gritted teeth. We think that the total cost should be displayed prior to the purchase, so that people know exactly what they are paying for and they do not have any nasty surprises. Amendment 42 states that such charges should be given equal prominence. People have the right to know that they may incur such charges, so that they understand exactly what they are getting into.

Stephen Doughty: My hon. Friend gets absolutely to the point. We have talked about Ryanair and the infamous charges for things such as insurance that are buried as deeply as possible in its website. Increasingly, companies seem almost wilfully to try to mislead consumers with such charges, either by hiding them or by doing clever things such as including tick boxes that mean yes or no, to try to trick people into paying for additional things that they did not know they were paying for.

Stella Creasy: Indeed. Good companies do not want to trick their customers, because if people are tricked, they are less likely to come back. It is bad practice, and why would anyone want to deal with someone who does not honour a contract by providing a quality service that represents value for money? The amendments are about getting to the heart of some of the practices of which consumers become unwitting victims.
We are not talking only about charges, although charges are the most obvious way in which people may feel that they have been misled by not being given clear information. Another example might be information about the qualifications of the provider of a service. I do not think that anybody who consulted Dr Gillian McKeith about nutrition would have thought to question whether she had appropriate qualifications until Ben Goldacre uncovered the fact that she had bought her PhD online. She was eventually sanctioned by the Advertising Standards Authority for calling herself a doctor, on the grounds that to do so was misleading.
Which of us would have gone through a contract with a fine-toothed comb—indeed, some contracts are implied—and studied all the information on which we based our purchasing decision? Information that is pertinent to why a consumer might commission a service should be displayed as prominently as all the other information, to ensure that they have the full facts. Gillian McKeith might have known all sorts of interesting things about nutrition, but it was not right to base her advice on the shorthand of being a doctor. I am technically a doctor, but if anyone were to have a heart attack in front of me right now, I could not help them because that was not the subject of my doctorate. People often ask me whether I have medical experience. I would never put in small print that I do, but such issues have occurred with some traders.
That covers amendments 40, 41 and 42. Those three amendments will be eerily familiar to members of the Committee, because they reflect the concerns we raised earlier about the information people have at the point of sale to ensure that they are not sold one thing only to discover that, in the small print, something else is part of the deal. Amendment 49, which is grouped with those amendments, is about a slightly different but linked issue: the information that consumers rely on when purchasing services. It is intended in particular to protect consumers from changes that service providers might want to make to a contract mid-term.
We have all seen that happen. I would be surprised if all Members who have a credit card have not had a letter from their provider recently changing the interest rates. Indeed, many have sought to exploit people’s current financial vulnerabilities by increasing their interest rates. As a result of that, interest rates on credit cards are higher than in many years, and essentially, by changing the interest rate, they have changed their contracts with their consumers.
We all understand that the cost of providing a service can change, whether through external conditions such as inflation, fuel price rises and tax rises or supply issues. The issue is whether consumers are then locked into a service and cannot use information to exercise their ability to determine whether a change in price for a service is fair.
Members will probably be familiar with the Bank of Ireland example from March last year. It invoked a small part in its contract, citing exceptional circumstances, to put up interest rates for more than 13,000 mortgage customers. It put up rates on its tracker mortgages, which are linked to the Bank of England base rate, from about 1.39% to 2.9% in May. The rate leapt again to 4.49% by October. Anyone thinking about what such an increase would mean to their mortgage will realise how financially substantial that change was.
The challenge for the Bank of Ireland’s consumers was that a tracker mortgage had been sold to them on the basis that it would track the Bank of England’s base rate, which is still 0.5%, plus a margin. The substantial changes in the rates faced by those consumers meant that many had little option but to pay, because getting out of a mortgage and finding an alternative is incredibly difficult, especially when the bank claimed that the change was owing to exceptional circumstances. They were, therefore, essentially locked into those payments. The bank reversed its decision with regard to 1,200 of those 13,000 people, but that still left 12,000 people paying a massively increased rate for their mortgage and dealing with a contract variation mid-term that they had little alternative but to accommodate.
That has caused a lot of concern in the mortgage industry, and we have tabled other amendments to test how other financial services issues that the Minister said would be covered by the legislation might be affected, such as when companies might try to change terms midway into a contract. Other people may have seen such mid-contract changes to service with mobile phone contracts. The presumption is that consumers will simply put up with that change without being given an opportunity to leave. If the contract is to be varied from the terms initially agreed to, the amendment would give consumers the opportunity either to leave the contract or to seek a comparable financial deal so as not to be particularly out of pocket.
The Financial Conduct Authority has written to banks about what happened with the Bank of Ireland and said that it is concerned that such terms may be unfair under consumer protection law. However, it is not clear how. As this is a consumer protection Bill, it is right to look at how people in such situations might be affected.

Andrew McDonald: Does my hon. Friend agree that it is reprehensible that many companies write to people mid-contract to announce changes to the terms and conditions when they really mean that they are increasing the money to be paid or the interest rate applied? That practice really ought to be avoided.

Stella Creasy: My hon. Friend is right. We can draw a distinction here. The Bank of Ireland used the concept of exceptional circumstances. It is ambiguous at best where an exceptional circumstance can be determined, but it decided that there were exceptional circumstances in relation to its tracker mortgages fixed to Bank of England rates. Against that is an understandable change in, for example, supply, which changes a trader’s ability to continue providing the service to which a consumer was contracted, and might mean that they seek to renegotiate terms. Furthermore, when a consumer is essentially locked into something, for example if they are asked to exit their own home in order to avoid charges, that is simply not reasonable—that word again—but it is a fair reflection of the challenge that was faced.
What can we do to make sure that the consumer protection law on things such as exceptional circumstances, is clear-cut enough that consumers have rights too? In situations like the Bank of Ireland mortgage rates rise, people should not be left, as 13,000 people are, paying four times as much in interest on their mortgage at a time when I am sure many people can ill afford it.
This group of amendments is about getting to the heart of how we help consumers to make the right decisions and ensure that they have the right kind of information at the point when they buy something. They should what they can expect; what the pricing will be; what the conditions of sale are, including all the terms of contract, not just what is in the small print but everything they might possibly be told about; and what they can expect and do should the service provider seek to change the terms and conditions of the sale at a later date.
I hope the Government will receive the amendments relatively well, because we all know people who have been in the positions that I have described and would therefore be concerned to ensure that the Bill can cover them. I know that the Minister will again tell us all about the implementation group when it comes to some of the issues around point of sale and costing, and I am also sure that she will tell us about the consumer regulations. It will be interesting to see how she feels they would be affected by such matters as total cost charging, and how that would be displayed. Service contracts may be changed midway through, which is not necessarily something that would happen with a goods contract, so it would be interesting if the Minister gave us her thoughts on how she sees the lessons from the Bank of Ireland mortgage issue and what she thinks it means for consumer protection.
As much as I am sure the Minister will say that this is about financial services, as a general principle it seems to us right to ask whether the law gives consumers clarity about what they should expect if there are mid-contract changes. That is what amendment 49 is about. I look forward to what the Minister has to say about these four amendments.

Jennifer Willott: As the hon. Lady said, amendment 40 is the same as amendments 6 and 31, which we discussed in the case of goods before the break and last week. We have also discussed the issue as it relates to digital content. As I said at those times, we can all agree that it is important that consumers receive the right information at the right time. I therefore reiterate that the Government are committed to ensuring that consumers and traders are better informed about their rights and obligations. Part of that is the simplification in the Bill, which is one of its main purposes. Providing excellent consumer information is a central part of the reform programme. As the hon. Lady predicted, that is why we have the implementation group looking at the matter. It is considering where in the process would be the most effective point to inform consumers of their different rights.
I will not go into that in detail, but in the case of services, which may be provided over quite a period of time, it is even more important to be careful about when the information is given. For example, information given by a builder arriving to start a job might be less useful than information that is given a couple of months later when he hands the work over to the customer. The time frame is quite important when looking at how to do this. Also, in the case of services, there is a significant amount of sector-specific legislation that sits alongside, or sometimes takes precedence over, the provisions in the Bill.
Therefore, providing information only about the rights in this Bill could actually be misleading to consumers. All these issues are being considered by the implementation group and undoubtedly we will hear more about that in the future. It would not be helpful to introduce into the Bill a requirement to provide information at the point of sale without a consensus that that is the best way forward. I therefore cannot support the amendment.
Amendment 41 relates to the communication of costs that a consumer will face. The Government are committed to making sure that consumers have clarity and transparency on costs, as they are one of the most fundamental factors in a decision to employ a trader or to take up a particular service. As the hon. Lady ably predicted, the consumer contract regulations are important here. For services within their scope, they will make sure that the trader provides information to the consumer about the total price including taxes before the contract is made. As I have said before, those regulations will come into force in June and will operate alongside the Bill.
As the hon. Lady said, it is especially important for consumers to know what they are paying for services. Some services can be some of the most expensive things we will ever pay for: a big extension or some other large piece of building work will cost significant sums of money. There can also be a considerable disconnect between the actual price and the amount the consumer expected to pay. For example, my parents-in-law recently had an extension built. Once the builders dug down, they discovered that there were no foundations at the back of the house, something they clearly had not expected when they started the job. That made the job significantly longer, and more difficult and expensive. There is no way that could have been predicted, and in such cases the expected and actual cost can vary significantly.
Under the regulations the price will have to be clear and comprehensible to the consumer before they buy. The Bill makes it clear that that information becomes part of the contract and cannot be changed without the consumer’s express consent. I will come back to how the price is calculated in a moment, but on the point made by the hon. Member for Cardiff South and Penarth, the regulations make it clear that the consumer’s express consent must be given before any payments are made in addition to those required by the main obligation. It will not be enough to have a pre-ticked box, as the hon. Gentleman highlighted: that does not signify express consent for additional payments and so will not be permitted. Those measures should go a long way to making sure that consumers know exactly what they are buying before they commit.
Importantly, when traders do not know the price, the regulations give them the flexibility to set out how the price will be calculated. With a builder, flexibility will probably be built in because they will not know what is going to happen. Flexibility is particularly important for services. For example, a painter or decorator might not know how many hours it will take to do a particular job but will know how much he charges per hour, and can therefore provide details of how the price will be calculated even if he cannot commit to a final price because of various circumstances. I agree with amendment 41 in principle, which is why the consumer contract regulations cover all those issues.
Amendment 42 concerns the new statutory right in clause 50 that information provided about the service or trader be binding, an issue I raised in response to a previous amendment. That right has been introduced to help consumers know what they are buying and to help them get what they pay for—we could refer back to the debate about people’s choice of haircuts and so on—and I am sure we all agree that that is a worthwhile intention.
A consumer could be given a lot of information about a service and a trader at the same time—that is normal when someone contracts for a service. We want the trader to comply with information that the consumer took account of when agreeing the contract. However, to be fair to the trader the consumer must take all information into account, including any qualifications that the trader might give—they cannot pick and choose from the information given. For example, a trader could say, “I will landscape your garden before the end of the month unless the weather is bad.” If it then absolutely buckets down for the rest of the month, the consumer cannot say, “Well, you said you’d do it by the end of the month,” and ignore the second part of what the trader said. The consumer has the right to regard the information as binding, but must treat any qualification to that as binding as well.
We have also listened to stakeholders and have made it clear that in order to qualify the information, the qualification by the trader must be given at the same time as the original information. They cannot go back on it later. We have made that change since publication of the draft Bill, when it went to pre-legislative scrutiny. I am sure everyone will agree that it is important to clarify that the qualification has to be provided at the same time as the original information.
Amendment 42 would add a requirement that such information be given with equal prominence, otherwise the consumer would be able to choose which information to take account of. As I have explained with regard to amendment 41, there is already a requirement in the consumer contracts regulations that information be given in a clear and comprehensible manner. That would cover information on the main characteristics and the price of the service, among other things. Any changes to that information must be expressly agreed by the consumer and the trader. So an additional requirement for prominence would not add anything for consumers, but it could place an additional burden on traders. We already have a requirement in the Bill that terms about the main subject matter or price must be prominent, to avoid being challenged in court for fairness. We will come to that part of the Bill, and I am sure we will debate the issue in more detail.
We also heard evidence from industry—it is in some of the written evidence the Committee has received, which I am sure we have all read in detail—that conversations with consumers would become more scripted and “stunted” in response to changes to the provisions on prominence. We want traders and consumers to be able to discuss the service being provided and to engage properly with each other. The evidence we have been given states that the more rules are placed on those communications, the less useful they become, and the more it becomes a tick-box exercise to make sure that someone has read everything on the script in front of them.
Amendment 49 also refers to clause 50. We all agree that it is disappointing when we are promised something that is then not delivered. That is why we are proposing the new right laid out in clause 50, so people get what they pay for. The right as drafted is a proportionate response to this concern. Consumers need to have confidence that they are getting what they think they are paying for. However, the very nature of the services sector means that traders need flexibility to respond to changes and challenges as they deliver a service.
For instance—I gave the example of my parents-in law’s house—a builder might not know the extent of the work that is required until they start doing the job, and it would be reasonable to have flexibility built into the contract to ensure that they can take into account the circumstances that arise as the job progresses. So, we are proposing a balanced solution in the Bill. The consumer has the right to expect that information given to them by the trader be correct, but the remedies we suggest are more flexible and proportionate.
Amendment 49 refers specifically to traders being able to change information that is given pursuant to the consumer contracts regulations, without repercussions. We agree that the trader should not be able to do that; there should be implications. That is specifically set out in subsection (4), which makes it clear that a trader cannot change information without the express agreement of the consumer.
On the remedies, we make it clear that a trader must comply with the information that has been given about the performance of the service. If not, the consumer is entitled to request that the service be re-performed until it does comply. This gets us to the same place as the second option given to the trader in the amendment: that the trader must offer the service contracted for.
The statutory remedies also recognise that, in some cases, re-performance in accordance with the contract might be impossible, in which case the consumer will be entitled to some money back. That sets quite a high standard. A consumer will also be entitled to some money back where performance in accordance with the contract is possible but cannot be done within a reasonable time or without significant inconvenience, an issue we discussed in a previous sitting.
We also agreed that in some cases, which we hope will be the minority, termination of the contract will unfortunately be the most appropriate remedy, so we make it clear in the Bill that it is still open to the consumer to terminate the contract, which they have a right to do under common law. Under common law this right is reserved for serious breaches, or for breaches of the most important terms. It is right that termination of a contract should be reserved for the most serious cases, rather than being an easy fall-back. For example, consider a small trader who agrees to paint a whole house, with one wall in cobalt blue. I have no idea why someone would want that, but one never knows. He does not realise that the paint is out of stock and he cannot paint the wall that particular colour. He has painted the rest of the house and that is fine. Is it right that the consumer should be able to terminate the contract for that minor point, when the rest of the house has been painted?
Under the Bill, the consumer can first request that the trader repaint that wall in the right colour, and only if that is truly impossible can the trader refuse. If he cannot get the paint he will be able to refuse, in which case the consumer will be entitled to an appropriate price reduction. The difference is that under the Bill the trader still gets the job. In the best-case scenario the consumer gets the whole job done. In the worst-case scenario the consumer gets the majority of the work done and some money back. That is a more proportionate and flexible way to handle the situation.
We consulted extensively on the new proposals and we received broad support for them. As I mentioned, there are also specific provisions on unfair terms. If the parties agree that one of them can change the terms in the future, they should be free to agree those new terms. However, to avoid challenge in court on the grounds that they are unfair, the terms must at least be prominent. In some cases, they will be open to challenge even if they are prominent. That is a significant increase in consumer protection.
The hon. Member for Walthamstow mentioned the case of the Bank of Ireland. That would be covered by the grey list—the unfair contract terms—which we will debate in more detail. The grey list is an essential part of the unfair terms legal framework. The Government propose to maintain the grey list in law, but make it clear for the first time that such terms are assessable for fairness. It already covers terms that allow the trader unilaterally to alter the characteristics of goods, services or digital content without a valid reason. Because that is already covered, we do not think it necessary to make this change.
I hope that answers the hon. Lady’s questions and that she will be happy to withdraw the amendment.

Stella Creasy: I thank the Minister for her answer. If I understand her correctly, amendment 40 and the question of how people might get information about their statutory rights at the point of sale of a service is a matter for the implementation group. We await the group with bated breath, given how important it has become. I draw the Committee’s attention to new clause 6, which asks for details on when the work of the implementation group will take place.

Mark Durkan: Is my hon. Friend starting to think that, if the Minister announces any more work for the implementation group, BIS will call it a growth sector?

Stella Creasy: The implementation group may have much in common with a pregnant panda—we all wonder when it is due to give birth. We understand from the assurances the Minister has given today that it will deal with exactly the issues that amendment 40 seeks to address.
The Minister says that the consumer regulations will come in, so we will get answers to the issue that amendment 41 seeks to address. On amendment 42 and the question of prominence, the Minister said, as I understand it, that consumers will have a right of redress under other parts of the Bill, because it could be argued that such information should have been given at the point of sale. That would be an additional request for information—not just about the charges but the nature of the service and the person providing it—that should be provided with equal prominence. That should be binding, in case a consumer did not see something in the small print. We have some concerns about that, but I imagine the Minister will ask the implementation group what information consumers can reasonably expect to be told about at the point of sale.
I take the Minister’s point about scripted conversations, but one of the reasons why financial services have scripted conversations is that there has been confusion in the past about what services will and will not cover. The script provides protection in that it prevents both the trader and the consumer from making assumptions that are not borne out.
We are a little concerned about amendment 49. I take the Minister’s point that varying contracts mid-deal is covered by the unfair contract terms. However, it would be helpful if she could point to the part of schedule 2 that she thinks covers the issues to do with exit. We agree that changing the terms mid-contract to the financial detriment of the consumer. The question is how that can be assessed, given that the unfair contract terms do not say that. Our amendments were tabled on that basis. If any reasonable person can recognise that someone cannot leave a contract because, for example, they would have to sell their house to get out of the mortgage obligations, are the unfair contract terms really enough of a protection? If the Minister accepts that that can happen, would it not be better to have a general principle to say that varying contracts mid-service is reasonable in some circumstances, but it should not be done at the expense of the consumer? The consumer should have the right to exit the contract, which is what the amendment would provide for.
It is not clear how the mechanism that the Minister set out fits together. For example, if a person is able to challenge the Bank of Ireland about their mortgage—although the 12,000 people were not able to do that—will they have a right to leave the mortgage and seek another mortgage on their property without penalty and without being financially penalised by any mortgage deal offered by a subsequent provider? If not, that person is essentially locked into a term that has been declared an unfair contract term, just because the Bank of Ireland decided not to offer a mortgage at any other rate.
If those provisions will be covered by the unfair contract terms, it would be helpful if the Minister could clarify where it says that the consumer will get redress and will not be penalised for not being able to leave the contract that has been declared unfair because of the nature of the good or services that it was against—for example, long-term borrowing for a house or a car. I want to tease that out so we can be confident that consumers cannot be locked into a contract that is escalating in price without redress that does not result in the loss of the service or the good in question. The Bank of Ireland relied on that format. It would be helpful if the Minister could clarify that.

Jennifer Willott: My understanding is that paragraphs 12 to 15 of schedule 2 relate to that issue, but ultimately it is up to the courts to decide whether the terms are unfair. Those paragraphs relate to the hon. Lady’s examples.

Stella Creasy: Given that the schedule of terms does not expand on the number of unfair contract terms that are part of case law, and that the Bank of Ireland customers have not been able to secure redress, can the Minister do a little more to guarantee that consumers have protection should their contracts be found to be unfair? I am concerned, because the existing legislation has not helped the Bank of Ireland customers. We have seen that happen.

Jennifer Willott: It is important to highlight that the Bank of Ireland case was not a court case. It went to the Financial Conduct Authority, which decided that there was no case to answer and wrote to the Treasury Committee to say so. I understand that that was because the Bank of Ireland put in place a range of alternatives. However, the unfair terms part of the case was not tested because it did not go to court.

Stella Creasy: I thank the Minister; that is helpful. However, it proves the general principle that if a contract is varied mid-term in a way that the consumer could not reasonably have expected and they are not able to exit it, they could experience detriment. We are seeking clarification about what rights consumers have not to be financially penalised or have a service that they rely on removed because they cannot afford the service or adapt to the way in which it is provided, but are locked into the contract. In the Bank of Ireland case, those 12,000 people were locked into a particular deal.

Jennifer Willott: What I can say is that new terms are being included in the list—lines 12 and 14 are new terms—but we will come to that in more detail when we discuss it. I am sure that the hon. Lady will want to go into it in more detail then.

Stella Creasy: I thank the Minister for that answer. With that in mind, I am happy to withdraw the amendment on the basis that we will come to the issue of what the implementation group, that pregnant panda, will deliver for us. When we come to debate schedule 2, clause 63 and the unfair contractor, we will get clarity on how to ensure that consumers who face contracts changes halfway through the term are not financially penalised. We have tabled an amendment to make explicit the financial detriment question. I would hope, from what she is saying—she sounds sympathetic to the plight in which those people found themselves—that there will be support for that amendment. Given her assurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 50 ordered to stand part of the Bill.

Clause 51  - Reasonable price to be paid for a service

Stella Creasy: I beg to move amendment 50, in clause51,page30,line37,leave out from ‘price’ to end of line 38 and insert
‘for all elements of the service supplied and the consumer faces ongoing costs or charges for an element of the service.’.

Sandra Osborne: With this it will be convenient to discuss the following: amendment 51, in clause51,page31,line3,at end add—
‘(4) To enable consumers to assess whether the price they are paying for a service is reasonable, and no more, and with regard to the provisions of section 50(1), the Secretary of State will—
(a) under the power set out in section 89 (Supply of customer data) of the Enterprise and Regulatory Reform Act 2013 enact regulations to require all regulated persons to provide customers with data regarding their personal use of a service,
(b) specify in a report presented to Parliament within three months of Royal Assent of this Act which traders operating as a business as defined by section 2 shall be considered regulated persons including any government, or local or public authority and therefore identify a relevant regulatory body to undertake the duties set out in paragraph (c),
(c) having regard to the powers set out in section 89(8) of the Enterprise and Regulatory Reform Act, require regulators of services provided by regulated persons to submit a report within three months of Royal Assent of this Act on guidance to include—
(i) the provision of such data in a format which enables the consumer to assess whether the price they are paying for a service is reasonable including but not limited to the description set out in section 89(7) of the Enterprise and Regulatory Reform Act 2013,
(ii) the provision of guidance that can enable third parties to make a request for this information with the consent of the consumer including measures to limit the total charge that can be applied for any such single request for data on behalf of multiple consumers,
(iii) requirements for those who hold data on consumers on behalf of any government, local or public authority to seek to use this information to secure social and consumer benefits for its application as directed by the Information Commissioner,
(iv) requirements for all regulated persons to recognise that primacy of ownership of any data generated directly in the course of a contract with a consumer at any point in its execution lies with the consumer and as such any decision requiring the transmission of this data in a format where the consumer can be identified to a third party by the trader must secure the direct consent of the consumer,
(v) requirements for all regulated persons to make available upon request to a regulatory body information pertaining to their management of non personal data collected in the course of interactions with consumers by traders for the purposes of enabling regulatory bodies to assess whether the rights of consumers to a reasonable price for a service have been infringed,
(vi) guidance for the trader to clarify their ongoing responsibility for the security and accuracy of data held on consumers whether the consumer continues to maintain a contract with the trader or not, and
(vii) guidance for all regulated persons on ways to make publicly available information about how consumers may exercise their right to access data for the purposes of being able to make decisions on contracts for services.’.
Amendment 52, in clause51,page31,line3,at end add—
‘(4) Where the consumer is required to pay for a service via a third party as part of another contract, for the purposes of assessing whether the charges they are required to pay are reasonable they will have a right to the full details of any contract including all charges and costs to which they are contributing.
Amendment 53, in clause51,page31,line3,at end add—
‘(4) Where the consumer is being supplied a financial service, the consumer shall be provided with such information as shall enable them to know the risks that were taken into account in calculating the applicable premium and the profit that either—
(a) the financial services company, or
(b) financial broker anticipates to make on that premium if there is no claim on the policy.’.
Amendment 54, in clause51,page31,line3,at end add—
‘(4) Where the service provided is for an additional assistance service, a reasonable price will be one which is judged by reference to the guidance set out by the original provider of the service who has approved the provision of such an additional service including specifying a range of costs for its provision which can be considered reasonable.
(5) An “additional assistance” service for the purposes of this Act is to be considered any service assisting a consumer to use the original service that does not alter the original service provider’s intent in operating this service.’.
Clause stand part.

Stella Creasy: This is what might be termed a behemoth of amendments, but they go to the heart of how we in the Opposition see consumer rights. I want to put it on record that amendment 51 in particular speaks to what I would argue is a different approach to consumer rights, the one that we in the Opposition would wish to take. When the Government introduce their policy proposals on consumer rights and legislation, we feel it right not simply to seek to amend them, but to introduce our own ideas and encourage the Government to see the progressive merits of what we propose.
With that in mind, given that amendment 51 is quite substantial, I will talk first about amendments 50 and 53, and then come to amendments 52 and 54. I hope that Government Members are settled in and ready for a rather long, but I think interesting, debate about the question of information. All the amendments go to the heart of what the clause seeks to do and whether it is possible. Clause 51 is about the right of a consumer to pay a reasonable price for a service. That leaves a simple question: how do they know that they are paying a reasonable price for a service? How do they access the information necessary to make good choices as a consumer? We know that markets are broken without good information, because information asymmetries allow people to be exploited and allow prices not necessarily to reflect a fair cost.

Fiona O'Donnell: Does my hon. Friend agree that that is particularly the case when someone has a service contract with a trader that does not cover all work? They are then tied in because they have already invested the money, but they find that the additional charges are completely out of kilter.

Stella Creasy: My hon. Friend is absolutely right. They also do not know what they are paying for; they do not know what service they are actually contracting.
To start gently, amendment 50 talks about how we might consider what information people need to be able to assess the fair price for a particular service given the questions about ongoing fees. A good example is pensions. We all know that there is a debate, particularly on the Pensions Bill, about disclosing charges. People should know what they are paying for, especially for a service that is due to serve them a substantial amount of time in the future.
We know that there are concerns, especially within the pensions industry, about whether people have information, especially from fund managers, about the costs and charges that they face. We know that people on annuities in particular are paying out a large proportion in fees, so the money is not actually going into their pension pot. They think that they are building up a substantial pot, but they discover on retirement that the reverse is true. Did they know that their costs were being affected in such a way? It is right to ask how to ensure that, as the amendment says,
“all elements of the service supplied and the…ongoing costs or charges for an element of the service”
are disclosed so that the consumer can tell whether their expectations for something such as a pension can be made good on, which would allow the consumer to make relevant provision. Although we appreciate that the Pensions Bill is being considered by Parliament, there is a consumer protection issue. There is cross-party agreement that fees and charges should be disclosed so that people know the cost of their pension and pension management.

Stephen Doughty: Will my hon. Friend join me in commending the work of our hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who has been doing excellent work in highlighting such charges? I have personally experienced a complete lack of clarity on these charges, which affected my ability to decide whether I was getting a good pension or whether I was being ripped off by unfair charges.

Stella Creasy: My hon. Friend is absolutely right. I, too, pay testament to our mutual friend, whose constituency I will not attempt to pronounce because I have never been able to get it right. He has been doing tremendous work in forensically detailing the way in which unfair and non-transparent fees and charges are to the detriment of consumers. Indeed, my hon. Friend the Member for Cardiff South and Penarth will see the hand of our mutual friend in this amendment.
Pensions are a good example of where clarity on pricing would allow consumers greater confidence in the choices they make. That relates not only to pensions but to ongoing service contracts that are perhaps more mundane. Anyone who, like me, has had the misfortune to try to use the wi-fi on, say, a Virgin train and found that it does not work and has then used their phone as a personal hotspot will be all too aware of the additional data charges that one might incur—they are always a nasty surprise. Again, those fees are part of the price because a phone is advertised as having the service and people therefore think that it would be a reasonable price within the contract. I can tell Members that, if they go over their limit, the price can be very expensive.
Those are all examples of where someone contracts a particular service and thinks they are paying a particular fee only to find a nasty surprise at the end of the contract term, or indeed as part of the contract term. Amendment 50 therefore simply gives people access to information on ongoing costs or charges so that they can be conscious as and when they make a choice. In the pensions market, for example, people would be able to know the financial implications of moving between different pension pots or moving jobs.
Amendment 53 is slightly broader and focuses on people’s understanding of risk when they use financial services. I know the Minister will point to the psychological research she has on overloading people with information, but I have great belief in the public’s ability to understand financial management and financial risk, and the research bears that out. Information can be provided in such a way that it enables the public to assess risk, but people cannot assess risk if they are not told about it. People cannot know what their pension pot might accumulate to if their pension provider is not giving them details on their annuity or any charges that might be incurred. That is not just an issue when investing in pension funds; it is also an issue when investing in ISAs, for example. I am sure many Members have had an ISA over a large number of years and realised that it has not made much money, but how they might have understood that risk, and understood where else they could have put their money, is not clear for many consumers. Amendment 53 simply does what all good financial services providers would do, which is to help people understand risk so that they can make an informed choice.
Amendments 50 and 53 are about the simplicity of information that consumers are provided with that would enable them to make good choices. They are therefore harbingers for amendment 51, which goes to the heart of a progressive approach to information and the role of information in markets and in empowering consumers.

Fiona O'Donnell: Does my hon. Friend agree that the fact that people were not properly advised of the risk of endowment mortgages damaged the industry’s reputation and cost it a lot of money in the long run? Does she agree that it is in the sector’s interests to give good advice about risk?

Stella Creasy: I agree. A number of residents in Walthamstow are now due to retire. In fact, one of them should have retired a good 10 years ago. He continues to work because he has an endowment mortgage, which is due to be realised in two or three years, if I remember rightly. The value of the property, being in a London borough, has increased substantially and the sheer cost of paying out his endowment mortgage will bankrupt him, so he is working and working, even though he is too frail to continue to work, to try to keep going to be able to pay that. Indeed, he has taken out a number of other loans to cover some of those costs. He is in a parlous situation. Nobody looking at that situation would ever have sold him the sort of mortgage product that he has. He did not know or understand the risks that he was getting into, for him or his family. He is a proud man and he is a broken man as a result of these changes.
We all recognise that financial products out there are good or bad for people. Surely, helping people to understand the risks and therefore to prepare for them is what a good society does. The last thing that any of us wants to do is to become the dead hand of the state picking up the problems and trying to deal with them. That man is very much on my mind when people talk about endowment mortgages, because I can see the problem that he has.
Indeed, thousands of people have interest-only mortgages that are also due to come to fruition and were taken out when it was regarded as the right way to manage getting on to the housing ladder, without an adequate risk-assessment process or consumers being given the information to make an appropriate risk assessment.
Looking at the housing market in the UK, particularly in London, I fear that people are again being given mortgages and poor financial advice about whether they can really afford them and the risks that they will face. Such amendments are not about saying that they cannot make choices for themselves; they are about saying that financial service providers in a good society act to ensure that people have a better understanding of risk and the ongoing costs and charges that they face.

Andrew McDonald: My hon. Friend has highlighted the scourge of endowment mortgages. I am Spartacus; I was one of those many thousands of people who took up those terrible policies. Any measures that can be introduced to give people greater information are good. In the 1980s, we were all provided with ridiculous projections about what such policies would produce that were never sustainable. I have one that will come to fruition in June. It promised to produce about £25,000, but I will be lucky to get £4,500 out of it. It would have been better if I had put the money under the bed.

Stella Creasy: I can only sympathise with my colleague. This problem reflects the poor information provided to consumers, although it should be provided to enable them to adequately assess risk.
Amendment 53 simply says that assessing risk is something that we want consumers to be able to do. We should ensure that they have that information.
Amendment 51 reflects the approach that we want to take to empowering consumers. Any consumer rights Bill should have at its heart not, as this Government’s Bill does, a principle about what people can do when things go wrong, but a proactive capacity for consumers to be able to avoid problems in the first place. Consumers therefore need to be empowered, because that offers them the opportunity to avoid those problems.
The three principles of empowerment are information, advocacy, which we will come to in clause 79, and redress. I want to talk about information and how we ensure that people have the information they need to deal with the choices they want to make, to tackle the information asymmetries that lead to inequality and poor prices, which reflect that inequality. One of those inequalities comes from the lack of information about what other choices people might have, or what service they are paying for.
The inequality manifests itself in the fact that many people in this country on higher incomes have their goods and services subsidised by those on lower incomes in part because of the information restrictions that they face. Healthy, fair and competitive markets have effective methods for information sharing, because they are vital to make an economy work for both consumers and businesses. The Government’s failure to ensure that people can access the data that they need to compare goods and services means that our economy is not functioning as well as it could do. We believe that passionately.
The Government’s own research, “Better Choices: Better Deals” argues that even were consumers only to use what are called first-generation intermediaries—namely, price comparison websites—they could in effect gain between £150 million and £240 million a year. It is interesting to note, however, that only 13% of users of such sites get the lowest-priced deal. The Government admit that one of the reasons is that those users do not necessarily have the right information. It is no good for the Prime Minister to get up and say about Government services that information is the best disinfectant, only for them not to provide the relevant information in a format that people can use. People who have tried to request from a service provider their own usage data, to which they are entitled under data protection laws and the subject access request legislation, will find that they are provided the data in all manner of formats. Whether that format is one that a consumer may actually use is the critical issue.
A recent EU survey found that UK consumers have some of the lowest levels of switching, in terms of comparing prices, reading terms and conditions and showing an interest in consumer information. At the heart of changing that situation and of empowering consumers is ensuring that we can unleash the capacity of data to help consumers make the right choice. A functioning and healthy market is one in which there is an information flow that allows every consumer to do that, so that every consumer is able to negotiate and navigate the best deal.
On Second Reading, we therefore talked about the midata project, which was also discussed in the evidence session. It is a voluntary programme of 26 organisations among energy, mobile telephone and financial service providers to get consumers to increase access to their personal data. That approach is entirely voluntary, although we recognise that the Government consulted in November 2012 on giving themselves an order-making power under what was to become the Enterprise and Regulatory Reform Act 2013 to enable them to compel businesses to release
“consumers’ consumption and transaction data in a portable, machine readable format upon request.”
Put simply, people should be able to request their own usage data in a format that they can use, so that they can make comparisons with other types of usage.
What does that mean? Back to therapy: I tried to switch my own energy account and I gave up after 20 minutes, because I could not understand the questions that I was being asked or even the information on my bill. I do not think that I am alone in that experience. Talking about the Bill with a number of colleagues, the question whether they have switched has come up time and again. I can tell the Committee that only a minority of other Members have said that they have managed the process. People often say that politicians are not representative of the wider public, but on that issue we are very representative.
Furthermore, fundamental questions need to be asked. If we accept the principle that what consumers need to be empowered is information, they might want to access information not simply about one or two areas of their lives, so that they can negotiate and understand whether they are paying a fair price, but across a whole range of services that they are paying for. We have therefore tabled an amendment that seeks to learn the lessons of the midata project and to understand how we can unlock the capacity of that data and not only apply it in the four sectors identified by the Government, but ask whether it has lessons across all areas in the public and private sectors, both of which the Bill covers, where we pay for services. Government Members, who are the first to argue that we should all be concerned with public value for money, would I am sure also recognise that consumers of public services are also entitled to be able to assess whether they are paying a fair price for goods or services.
The amendment therefore does a number of things. It is probably helpful for me to talk through its various provisions. First and foremost, it would require the Government to use the powers to do with the midata project that they have not yet enacted to overcome the unsurprising reluctance of companies to release data. It does not take a rocket scientist to work out that if one of the ways that a company can retain customers is through information asymmetries—making it difficult for customers to cross-compare goods and services—why would companies co-operate and release data in a meaningful format? It is one thing to go on to a price comparison website and look at various costs and charges; it is another actually to be able to compare like with like.
The amendment would use the power that exists in the Enterprise and Regulatory Reform Act 2013. We have recognised a good thing to do under that Act, so let us get on and unleash the data, so that consumers can use them. The amendment also asks a question: if we accept the principle of unleashing data and can access the relevant information, in what areas of our lives do we need to be able to assess whether we are paying a fair price for a service? The amendment would require the Government to look across a range of sectors covered by the Bill, including national Government and local and public services. Are there lessons to learn about how we release data in a portable and user-friendly format—after all, that is at the heart of the midata project—that could empower consumers in other parts of their lives?
Having set the test to discover whether there are broader lessons for the public and private sectors, the amendment lays out some of the framework for managing the data. We all recognise that it is important that we manage data appropriately, and the Opposition want to see data managed in a progressive way. The amendment would require a report into whether data should be provided in a format that people can access in a portable way and how that might be determined. It sets out that that would be the role of the regulator. It is not a burden for business; we think regulators should be doing it. After all, the regulator is supposed to speak on behalf of the public in interactions with service providers. It is therefore right that the regulator is asked to look at how data can be provided.
Sub-paragraph (ii) of amendment 51 would require the regulator to report on the provision of guidance that can enable third parties to make a request for information, which raises the concept of next-generation intermediaries. We have talked briefly about first-generation intermediaries—namely, price comparison websites—and have already discussed whether people are able to use them to their full benefit; we know that many are not. The Opposition are interested in the growth of next-generation intermediaries in other countries and whether we can do more to encourage them to develop in this country. Next-generation intermediaries take the principles behind price comparison websites and expand on them. Whereas a price comparison website might try to bring together basic information about different services but have difficulty in comparing like with like, next-generation projects bring together consumers to negotiate or collectively bargain.
In Australia, consumers have been banding together in their thousands—indeed, one in 14 Australian citizens is a member of such a vehicle and has been able to negotiate substantial decreases in energy costs, health insurance and more general insurance products. There has been a huge revolution for consumers, led by consumers. Next-generation vehicles can go to a service provider and say, “There are 10,000 to 15,000 consumers signed up. Tell me what price we can pay collectively.”
The amendment is about enabling that process to take place—enabling consumers in Britain to not just get hold of information individually, but club together to negotiate the deal that they want. We do not want service providers to try to evade such actions by putting large charges on to the cost of providing data, so the amendment would require the regulator to set out how to ensure that, where consumers want to work together and have given their consent to a next-generation intermediary company, they can request the information en masse, without contradicting the group’s ability to act on behalf of consumers.
Basically, service providers must not make the cost of providing data so exorbitant that it would prevent switching happening, or restrict consumers’ capacity to shop around as a collective block. I think that we would all recognise that it is one thing to go to an energy company with a like-for-like comparison and say, “I want the same tariff;” it is another if 10,000 people do. I encourage Members who have not yet looked at what is going on in Australia to investigate it, because that seems to be exactly the sort of consumer behaviour that we want to unlock in the UK, to help consumers to stop the high costs of energy and insurance in the first place by allowing them to negotiate together themselves.

Fiona O'Donnell: I wonder whether my hon. Friend—I am sure many hon. Members have—has heard from their constituents who they feel that they have been ripped off by factoring services. Does she see any opportunity here for consumers to act together to renegotiate or change the terms of factoring agreements?

Stella Creasy: We recognise that we are at an early stage in the UK. Those are exactly the sorts of issue that we could look at. How can we help consumers to come together and have real muscle to negotiate collectively, without the state having to do it, and look for the deals and vehicles that they want to work through?
Hon. Members might have seen things such as “The Big Switch”. They are about how we get the information that makes those processes happen. The instance that my hon. Friend described is exactly on the same point. One of the things that stops collective bargaining is not having collective information. If we can unlock the information, consumers can choose whether they want to participate in the next stage. However, if we do not provide the framework that allows the information to be unlocked, we will never get further along the process.
I want to turn to sub-paragraph (iii) of amendment 51. Having unlocked that information, as data are such a resource in our society, we should be asking how we can use the information to secure social and consumer benefits. I am sure that many hon. Members will have been lobbied by their constituents regarding the care.data project and the concerns about unlocking data in the public sector. We recognise that there are benefits to be gained from using the data collected in the public sector, but we think that those benefits should accrue to the public first and foremost.
We think that there are some general principles. Sub-paragraph (iv) of amendment 51 includes suggestions about ensuring the primacy of ownership of data by the public. If someone has created the data, they should be their data. We should be wary of eroding that right, in the same way that we should be wary if we were eroding someone’s democratic rights—their data, their ownership.
We want to ensure, however, that we can use the data, as the resource they could be, to tackle some of our health care problems, to understand trends and to use what people call big data for social benefit. The amendment would set out principles that people who own the data sets should adhere to: they should not hold back on data, but they should seek to secure public benefit from them. It is not enough to own that data set—people should do something with it—but what they do with it should be for consumers’ benefit and the public interest.

Oliver Colvile: Is the hon. Lady aware that pharmacies are campaigning firmly to have data from general practitioners shared with them? She is right to say that the data have to be in the ownership of the patients—they own the data in the first place—but it is important that we give health professionals as much opportunity as possible to look at some of the those data, subject to patients requiring that. The pharmacy industry’s campaign is very big.

Stella Creasy: The hon. Gentleman has hit the nail on the head. He is right that there is an opportunity. However, the question for all of us, and the concern that has rightly been raised, is in whose interest those datasets are acting.
The amendment would recognise a public value-for-money test. How would a consumer of public services know that they were getting value for money, which is, after all, a fair and reasonable price to pay for a service? They would know from getting the social benefits of the data that they have contributed to. We therefore think that it is absolutely right to look at whether the model set out in midata and the data management model that that project sets out can be applied to the public and can answer some of the questions the hon. Gentleman asked.
How data are shared and manipulated to find the trends that we are looking at should surely be a matter for the interests of the patient. There are concerns about identifying patients, how the information might be used and how someone might be able to drill down into it. Privacy is a key concern for patients.
We ask therefore ask that data be managed in the social and public interest and that we have a broader conception to which we can hold organisations as a result. After all, a number of datasets held not just in the public sector but across society could have social benefits. It is absolutely right to ask that, if we have contributed to them, it is in our consumer interest to unlock that social benefit.
We have proposed within the NHS constitution enshrining people’s right to own data that they have created. That should be a general consumer right—we are all consumers of public services—so the Bill seems an appropriate point to ask how such a right will be affected by these proposals. People would therefore have the right to understand whether they are paying a fair price for their public services, in the same way as people would have a right to understand whether they are paying a fair price for any service that they might commission in their private life.
Given that the Bill explicitly covers services and trades offered by local and national Government, as well as other public services, we think that it is entirely in scope to look at these issues. Indeed, my colleague from Norfolk, Mr Foreman, has offered a series of proposals in respect of patient records. Other datasets might have a similar format. For example, there will be a dataset in education. Surely, it is right that, as consumers of education services, our constituents can understand how that dataset is used and benefit from it. We seek to have the general principle that those who create the data should benefit from them.
Sub-paragraph (v) of amendment 51 is about the collection of data. I draw a distinction between someone’s direct personal data that a company might hold—for example, on usage—and the collective, non-personal dataset to which they have contributed by using that service. Consumers should be able to assess whether they have paid a fair price for a service that relates to those non-personal data.
In theory, all those non-personal data are already in the public domain. Let us take, for example, supermarket pricing. If someone has contributed to how a company prices a pint of milk, they could go from store to store to identify the difference in price, and they could pool that information. In reality, few of us have the capacity to do that. Again, that leads to companies being able to exploit an information asymmetry, whereby people simply cannot test whether some of the deals on offer are good because they cannot go from store to store themselves.
We recognise that there is a test for business about the sharing of data directly with consumers and that there would be a number of complicated data protection questions; they would arise, for example, if people could access their own clubcard accounts, as well as the dataset that their clubcard accounts are part of, to identify the demand for goods, the price paid for them and all the choices that are part of the price that they pay. That is why it is right to have a halfway house and to argue that a regulator could consider whether the prices that people pay are fair. As a society, we would then have a mechanism to explore those datasets when we have concerns about the prices that people are offered, without compromising people’s data security and management.
Let me give the Committee some examples of non-personal data. We have all seen coverage in the papers of special deals that look good but turn out not to be. A regulator should be able to look at such pricing information and mis-information and understand whether consumers are paying a fair price. One of my bugbears as a London MP is that the cost of goods in my local express store owned by the same supermarket is higher than if people could go up the road to the main store.
People might be cross-subsidising, through a lack of information about prices, express stores over the main superstores. My constituents, who increasingly do not have access to main superstores but are given local stores, might be subsidising residents in more affluent parts of London who have access to the major stores. I would expect a regulator to answer questions about whether the prices that my constituents pay are fair and about the subsidy that they pay to have an express store on their doorstep, as opposed to being able to go to a major store.
It is right therefore that we have a format and a way to access the collective dataset, as opposed to just a format to access the individual dataset, because both are important in tackling the information asymmetries that allow consumers not to pay a fair price.
The final part of our mega-amendment 51 that reflects Labour’s increasing approach to empowering consumers is about how we protect that data. We have already had a debate about protecting consumers from nuisance calls. The amendment is about data protection. If we recognise data as an important resource for empowering people, we must also recognise the need to protect the data source. Whether in the public or the private sector, making the service provider responsible for the security and accuracy of data seems important.

Brooks Newmark: This is really a point of clarification. The hon. Lady caught my attention when she talked about cross-subsidisation, which particularly applies to petrol stations. In densely populated urban areas, the price of petrol is often lower than in rural areas. Many of my constituents are paying much higher prices than those who are being subsidised. I am trying to understand what she is suggesting in terms of price transparency, because price transparency already exists. Is she calling for more transparency about subsidising prices? What point is she trying to make with the amendment?

Stella Creasy: The point of the amendment is that people need to understand prices in order to know whether they are paying a fair price. The clause is, after all, about a fair price. How do we unlock the power of information to give consumers a better deal? How can consumers better understand whether the price at the pump in Braintree, as opposed to that in Colchester—having lived there, I am not sure that I would describe it as a gritty urban town, but I recognise the difference that the hon. Gentleman is talking about—is fair?
Given that prices should reflect consumer demand and supply in a functioning economy, we believe that there is a role for a regulator to analyse the datasets that companies generate to assess their pricing. A consumer may have a loyalty card with a petrol station, through which the company builds a dataset about them. The consumer has a right to those data, but the company has complete discretion about how they provide them. That means that a company might fulfil its obligations to respond to a subject access request, but the data might not be meaningful. Given the benefits to the consumer of understanding whether they are paying a fair price, we believe that there should be a way of unlocking those data as an individual and as part of a dataset. All the users of a petrol station in Braintree contribute to its profitability, as do the calculations made about the use of other petrol stations in the area. All those conversations are taking place within the service provider, which looks at its profit margins and works out where it can charge certain prices.
Consumers contribute to the company’s database, so we believe that if concerns exist about unfair prices, an independent agency should be able to analyse the data and ensure that, say, a consumer and their neighbour are both paying a fair price. That is the difference between personal and non-personal data. In both cases, if we can unlock the power of information, consumers will get a better deal without the need for state intervention.

Brooks Newmark: I am trying actively to listen, and I think I know exactly what the hon. Lady is getting at. Being equitable, transparent and fair are all important, but the flip side is the cost of gathering that information and putting it together. It sounds to me as though that is a costly exercise, and the cost may unfortunately be passed on to the consumer. The unintended consequence of her attempt to achieve lower prices and greater transparency may be to cost the consumer more. If I have misunderstood, please tell me.

Stella Creasy: I think the hon. Gentleman has misunderstood, because the data already exist. The company owns the dataset to which the consumer has contributed, and it uses it to set prices. However, there is no scrutiny or supervision of those data in the consumer’s interest. That is what we are trying to unlock. [ Interruption. ] Well, I do not think it would cost more, because the dataset already exists.
I know people who go around their local area and check prices between and within companies to assess whether they are paying a fair price. We simply seek, through a regulator, to unlock for public benefit the power of the existing data that are held for commercial interest. That would save individuals from having to do all that work themselves to ensure that they are not being ripped off. An example could be when a supermarket says it is offering a special deal that is not in fact special. We have seen examples: “Panorama” did a study that found that in Asda a 1 kg “Better pack, better value” tub of Clover spread cost more than two 500 gram tubs. All that information already exists; we simply do not have access to it.

Brooks Newmark: But there are websites—MoneySuperMarket.com and others—on which one can do price comparisons. It may be that since social media such as Twitter are still relatively new technology, the market has not got to the level of efficiency the hon. Lady would like, but I do not understand why we need Government involvement and Government regulation to achieve that. Surely, when it is in the consumer’s interests some bright spark—a student at some university—will come up with a mechanism to bring that transparency about.

Stella Creasy: Forgive me, but I think the hon. Gentleman was absent from the room when I started on the long journey of trying to explain the problem with the clause. That information does not exist, and one of the challenges—[ Interruption. ] The hon. Gentleman says the market will do it, but that is precisely the problem. This is an issue of how we make the market work better. In whose interests is it to release those data, when having them enables a company to capture customers who do not know in full detail whether they are paying a fair price?
 Mr Newmark  rose—

Stella Creasy: Forgive me, but I really want to make this point. The hon. Gentleman raised the issue of price comparison sites. I do not know whether he was here when I was talking about first generation intermediaries, which are price comparison sites, as opposed to next generation intermediaries, which are what the Opposition want to unlock. First generation sites rely on particular information but do not get all of it, and so consumers cannot compare like for like. We want to unlock the capacity for making a true comparison, removing the information asymmetries that exist within the market.
The hon. Gentleman is suggesting that the market will somehow mysteriously provide all that information, but companies are not clear about their pricing, and they can get away with telling consumers that they are paying a cheaper price or that the “buy one, get one free” deal is a good deal because there is not that transparency right now. [Interruption.] The hon. Gentleman is shaking his head, but there have been quite a lot of studies on this matter. That is why the Office of Fair Trading issued new guidance to supermarkets—unfortunately, it is voluntary—about how they market such deals.
We are making precisely the point that the hon. Gentleman is making: rather than the Government getting involved, there is a benefit to making our markets more open and free by using that information. We want to find a way to make that information accessible for analysis by an independent third party. If someone could get hold of every loyalty card dataset, they could unlock a tremendous amount of information on spending patterns and prices, which would enable us to have a better understanding of whether a fair price was being offered.
In itself that would unleash the kind of competition that I think the hon. Gentleman is talking about. He is expecting the market to do it but the fact that it has not already happened tells us that companies are holding on to those datasets, which must already exist, because it is in their commercial interests to do so. I encourage him to look at the midata project and reflect on why we have such poor switching rates in the UK, why consumers are not able to enter into new arrangements and new deals, and whether it is the lack of information that is stopping them. It cannot be from a lack of interest, as we can see from the banking sector, in which some rules on switching have been changed to unleash that capacity where there is read-across for data.
We do not want to have to deal with prices for the public. We want there to be a power to enable the public to get information and to know whether they are paying a fair price, which in and of itself would encourage businesses to offer a fair price. That is what amendment 51 would do. Underpinning the Opposition’s proposals is the preventive approach to consumer detriment that we want to take.
I am acutely conscious of time, and I want to move on to amendments 52 and 54. However, I know that some Government Members are interested in the power of big data to unlock markets. I hope they will find amendment 51 interesting, as it simply points out that we need to find ways of doing in the UK something that has been done in other countries for public and consumer benefit. It would enable that work to be done.
Amendment 52 deals with another situation in which people might not be able to access information to secure a fair price. I want to put on the record a personal case from my constituency that well illustrates the problem. I have 4,500 residents in Walthamstow who are leaseholders, and as part of their lease they are required to pay for buildings insurance. As part of that buildings insurance, they are also required to pay a terrorism surcharge. The freehold managers who oversee the leases have determined that Walthamstow is a terrorist target. I know that because I have written to them about it, and they sent me back press coverage of the fact that one of the plane bombers lived in Walthamstow.
That means that 4,500 of my constituents are paying an extra £80 on top of their buildings insurance, which is already an expensive premium, as part of their lease. They have gone to a leasehold valuation tribunal to try to resolve that, because it is a substantial sum to be paying when we cannot say why Walthamstow would be a particular terrorist target compared with anywhere else. We know that other leaseholders are not paying such premiums. The contract for the insurance they are paying for directly is held by the freehold managers. The insurance company, Oval, has steadfastly refused to give my constituents, despite many interventions, the details of the policy they are paying for.
My constituents simply cannot assess whether they are paying a fair and reasonable price, even if one were to agree that Walthamstow was somehow a terrorist target. I have yet to see evidence to prove that, but if people should be insured for it, they should have a right to the information on the contract they are paying for to assess whether the charge is fair and reasonable.
Amendment 52 would ensure that people could access that information. Those 4,500 constituents of mine are stuck, unable to exercise their rights to challenge that contract because they cannot prove one way or another whether it is a fair price. They are not alone in dealing with those issues; I know that a number of leaseholders have dealt with them in the past. It is an entirely fair principle that, if someone is paying for a good—even if on behalf of a third party—they be able to access the relevant information to ensure that they are not paying over the odds.
Amendment 54, the final one in the group, is an interesting amendment, not least because we welcome the fact that the Government appear to have moved their position since Second Reading, when they said that the Bill could not deal with copycat websites. They have now stated that it absolutely does deal with copycat websites, so we welcome their announcement today of a crackdown on copycat websites.
I am sure that all members of the Committee are familiar with copycat websites. Let me bring some constituency experience to the issue. A constituent of mine paid £500 to the Tax Return Gateway for what she thought was her tax return, only to discover that the fee it charged was for processing her tax return, not calculating it. Transport for London tells us that 1,000 people a day are paying for their congestion charge through a copycat website, which adds an extra £4 to the cost. We know that increasing numbers of people have complained to the Government about paying copycat websites an additional premium for services that should be free or have a relatively reasonable charge. The European health insurance card should be free, but some sites are charging £24 to process the application.
Some sites offer added services, and our amendment is crafted to recognise that there are some additional services that people might want. I went to the post office to get my passport application checked, for example, and people might welcome having an application checked so that they know it is right the first time. I did not, however, pay £72.50 to have it processed, which is what some people are paying through uk-passport.net. Anybody who has looked at such sites will know that they use colours, formats, texts and fonts that are very similar to the official sites. They buy up the Google AdWords so that their website appears at the top of the listings. The Government’s announcement today that they have done some work with Google to crack down on how such websites are advertised is welcome. That is despite the Government having told us that they did not feel that the Bill was about that issue.
Our concern is that such sites are a bit like Japanese knotweed. We might be able to shut them down quickly, arguing that they are not offering an additional service and are therefore misleading consumers, and that it is an unfair contract term—with my constituent who paid £500, we managed to get the money back through her bank, but not through the company itself, which still disputes it and claims that she owes the money—but unless we do something fundamentally to change the way the market for additional services operates, they will continue. They will simply set up new usernames and accounts and continue charging people.
It was therefore with great interest that I read the Government’s press release, which claimed that the Consumer Rights Bill was absolutely designed to tackle copycat websites and lists it as an example of the legislation they are bringing in to crack down on such sites. While working with Google to de-list such sites so that they cannot be found when people google terms such as “passport application”, which is how people find them, we need to challenge the idea that we can pick off individual sites and find a way to recognise that people are exploiting such searches. We all want people to be able to access services online, so we do not want to stop people accessing such services or providing appropriate additional services. We need to find the right balance.

Fiona O'Donnell: I am so pleased that my hon. Friend is highlighting many of these cases. Does she agree that the Government also need to talk to the FCA and the banks about when the consumer suddenly realises that they have been conned and wants to stop such transactions? One of my constituents tried to stop a £400 charge from Tax Return Gateway being taken from their account, but for some reason their bank would not co-operate.

Stella Creasy: That is the difficulty. I know that Tax Return Gateway, having contacted it about a case in my constituency, argues that it provides a legitimate service and one would not want to ban additional services. I have used an additional service that helped with my passport application and found that useful, and I am sure other people have used such services. The question is, what is a fair price to pay for an additional service? If someone was paying more than that, a bank ought to be able to intervene, say that that was an unfair service charge and that, therefore, the contract was not valid and they could get their money back. That is what we had to do for my constituent. It is because the situation is so unclear that we need a framework for preventing the problem in the first place.

Mary Glindon: Is that not all the more important for some of the services on the list kindly provided by my hon. Friend’s office? The European health insurance card service—I know all about, that as I was involved when it was set up—is completely free, so we cannot even talk about what would be a reasonable price to pay for access to such Government services. Moreover, if people are happy to charge unreasonable amounts for some of the other services and copycat sites, how can we be sure that the data they collect, such as national insurance numbers, will be held securely?

Stella Creasy: My hon. Friend raises an issue that relates to the reason why we tabled amendment 51: ensuring data privacy, whichever service people contract to. That is why the Government should look at these issues.
Our amendment simply says that judging whether a price is reasonable—as the clause sets out to do—should be done by reference to the original service provider. Frankly, the passport service should be able to offer guidance on what it considers to be a fair price for having a passport application reviewed. By way of contrast, TfL may well say that there is no fair price to pay for completing a congestion charge application because its website makes it so easy to do so. Therefore, anybody charging an extra £4 a day for the congestion charge—that is 40% on top of the cost of the £10 congestion charge—would be acting in an unfair manner. Therefore, they would not be charging a fair price and the person paying the charge could get their money back.
The amendment is a way to ask the original service provider to help deal with the problems at source. That would give the departments particularly targeted by these firms the ability to fight back. They could say to Tax Return Gateway that £500 is not a fair price to pay for filling in a tax return: there might be a price that one might want to pay for online accountancy services, but that is not it. Guidance could be set out and anybody being charged more than that would have recourse to go to the bank and say they have been misled, that it was not a fair price and it breached their consumer rights. They could ask for help to get their money back, and would be able to do what my constituent was able to do through her bank but the constituent of my hon. Friend the Member for North Tyneside was not, because there is ambiguity about whether such behaviour is illegal. It is not illegal at the moment because there is a facility for additional services. We are saying that the original service provider should set out guidance on what is a fair price to pay—[Interruption.] The hon. Member for Braintree is shaking his head again. I look forward to his intervention if he wants to explain why he is frustrated by that proposal.

Brooks Newmark: It may be a result of our respective philosophical perspectives, but hon. Lady is trying to say that there is one arbiter out there who can judge what pricing is. If she was arguing that we should deal with hidden pricing and hidden costs, I would completely agree with her. If she was arguing that we should deal with circumstances where the service provided was completely wrong, I would agree with her. However, she is simply arguing against market forces. If someone is willing to charge an extra amount of money for a particular service, such as filling out a passport, and I know that that may cost me an extra £40 or whatever the amount, I do not see why the Passport Office should act as judge and jury in deciding what someone else can charge for whatever extra service has been provided. I just do not understand what the hon. Lady is driving at.

Stella Creasy: That is quite interesting, because I suspect that the hon. Member for Braintree will be deeply unhappy with some of the work that the Government are doing on this, because we have all recognised that there is a problem with the copycat websites. I encourage the hon. Gentleman to google passport application to see some of the sites for himself and how easy it is for people to think that they are on the official site and to be misled by that. The pricing structure is not clear. I recognise that the Minister is trying to crack down on that and attempting to ensure that where sites are unclear, that means that they should get delisted. The fundamental problem remains that the industry continues, it is ripping people off and more and more people are being caught by it. That industry can continue to operate because it is exploiting confusion about the price of a passport application, or the price of the congestion charge. It is not fair to ask organisations to pay to compete on Google AdWords, which is the only other way that we could try to deal with the problem, but it is fair to use the provisions in the legislation on unfair contract terms, which are designed to ensure that consumers pay a reasonable price, to set out the reasonable price set by the original service provider. Surely, the Passport Office must have some understanding—
 Mr Newmark  rose—
 Andy McDonald  rose—

Stella Creasy: I will give way to my hon. Friend for Middlesbrough.

Brooks Newmark: But the hon. Lady just commented on my earlier point, and on a point of clarification—

Sandra Osborne: Order. May we a proper intervention, not from a sedentary position?

Brooks Newmark: Sorry, Mrs Osborne.

Stella Creasy: I am happy to give way, given that the hon. Gentleman is so vexed.

Brooks Newmark: Once again, the hon. Lady is conflating two different messages. One relates to someone who says that they are providing a service, a claim which in itself is inaccurate—someone will not get their passport completed. Therefore, a person thinks that they are paying for one thing being done, when that action will not be performed. That is an example of misleading information. The other argument relates to someone who is providing an extra value-added service, and in that instance the hon. Lady still wants extra clarification on pricing. I do not understand why the hon. Lady is mixing up those two messages, but perhaps I have misunderstood again.

Stella Creasy: I think that the hon. Gentleman has got a little bit confused. We are talking about public services. The passport is provided by the Government, so it is right that people know what they should expect to pay. After all, the clause relates to paying a reasonable price, and the right of the consumer to pay such a price. Unless the hon. Gentleman is challenging people’s right to that, and intends to vote against the clause, the question is how people know that they are paying a reasonable price.
The purpose of the amendment is to tease out what people would pay for a service, and how they would know that it was a fair price. Given that the companies in question are setting such huge premiums, the price charged does not appear to be a fair price, and Government action on that suggests that they agree with us. Despite having said that they did not intend to deal with copycat websites under the Bill, the Government have now said that they want to do so. However, despite the Government’s press release about that, the Opposition are still struggling to understand how the legislation will deal with such websites, and we think the amendment would deal with the issue at source. It would address the problem of people being charged an additional premium for an additional service when the rate of that premium is not clear. We believe that the original service provider is best placed to understand what the original price should be.
The four meaty amendments go to the heart of the message that we want to give out—empowerment starts with information. Empowerment is about preventing consumer problems and changing the market so that it works for both businesses and consumers. When information flows more freely, the market is more free. Government Members claim themselves to be in favour of free markets, and do not want to see the state always having to intervene when prices are set high, so I hope that they will support the amendments on that basis. The people who are best placed to understand whether they are paying a fair price are consumers, so the more information we can unlock for them, the more likely they are to make better decisions in the first place. I hope that Government Members will support the amendments on that principle.

Fiona O'Donnell: The fact that so many Members are on their feet to discuss these four amendments is testament to the excellent job my hon. Friend has done in drafting them. She describes them as “meaty”. Meaty, beefy, big and bouncy are the four words that I would like to apply to them.
In his interventions, the hon. Member for Braintree seemed to struggle to understand people who are not perfect in every aspect of their lives, as is often the problem with the Government. So it is perfectly acceptable that if people are flawed in some way and can be ripped off by traders, there is nothing that we should or could do about it. The purpose of my hon. Friend’s amendments is to try and take some of the onus off the state. All Governments agree that we should regulate the energy market; there is a reason that we need to try to extend this provision by using words like “reasonable” in the way that the market operates. I do not think that it is morally acceptable to say that, because someone is not clued up enough not to fall for a rip-off website, or for a website that provides a service that is free otherwise, that there should be no way to restrict their ability to do that. The hon. Member for Braintree should remember that to err is human.
Like my hon. Friend the Member for Walthamstow, I had a constituent who used the tax return gateway. When they entered the letters “HMRC” in Google, that was the first website to appear. All the colouring was in the colours of the department. I have been told that that has since changed; it no longer comes up from a Google search and the colours have been changed. However, at that point, it is understandable that they made that mistake, filled out their tax return, then paid £400—thinking that was paying their tax bill. The bank refused to cancel the charge.
It is “reasonable” that people make these kinds of mistakes, and the free market, at that point, needs to be curtailed in some way. The essence of many of these proposals and the impact of these amendments is about empowering consumers. I feel it is only right that I give way to the hon. Member for Braintree.

Brooks Newmark: I totally agree with what the hon. Member for Walthamstow and the hon. Member for East Lothian say about websites that are copycat and misleading and so on. I am in complete agreement on that.
Where I differ, and where I have a problem with the amendment, goes back to what I discussed at the beginning of the day. It is this concept of “reasonable”. If there is no malicious intent with a website, the copycat is not really a copycat, it is not misleading and they are providing an additional service—for example one may get a passport and there is some extra service being provided—what is proposed is equivalent to the Government arbitrating; somehow there is a greater arbiter out there that decides what is “reasonable”. It is the difference between “misleading” and “reasonable” and mixing the two up in the same amendments that I have difficulty with.

Fiona O'Donnell: I hope the hon. Gentleman caught the contribution earlier from my hon. Friend the Member for Edinburgh East. She said that the word “reasonable” is a term that is generally easy to interpret. I do not think it is beyond the wit to make this work. The hon. Gentleman may say, “Misleading—what is the difference?” , but I do not think that to say, the website is pink and not green like the HMRC website, is in itself enough reason not to act on this issue.

Brooks Newmark: On a point of correction, I am not debating the word “misleading”. I agree with everybody here on the concept of misleading. We all know what misleading is. Where I differ is on what is “reasonable” and having a third party arbitrate on what is “reasonable”.

Fiona O'Donnell: I do not agree that we all agree on what is “misleading”. If the website does not attempt to mislead but imposes an unreasonable charge, we should try and arbitrate on that point. I do not accept what he said.

Mark Durkan: Surely the adjudication is not so much on what is “reasonable”, but what is “unreasonable”, which is normally clear to establish in a given situation. The hon. Member for Braintree also made the point that it is not the Government’s role to look at these things in adjudicating. If we are talking about a key Government service site and interface, and the fact that increasingly, such as with HMRC, people are told they will not have the options of using inquiry centres or all the traditional methods and everything has to go online, surely there is a particular onus on Government to safeguard the integrity of citizen interfaces with them online.

Fiona O'Donnell: Absolutely. I agree with my hon. Friend. This is one of the dangers with the market. Recently, I thought I had renegotiated my energy prices with Sainsbury’s. When I asked what the cheapest price was, the person giving me advice said: “I can’t actually work that out for you. Gosh, this is difficult, isn’t it? It is not easy to tell someone what the best tariff would be”—and she was the person who had access to my data. We then agreed an 18-months fixed rate with Sainsbury’s. I waited and heard nothing from them, I phoned up again and said: “I have still not received details of the confirmation of this fixed price”. They said: “It will come out a few days before it is due”.
Like my constituent, I then made the mistake of not continuing to pursue it until I had the letter from Sainsbury’s saying my energy prices were rising. I phoned them up and said: “We agreed a fixed rate”. They said: “Well, prove to us that you phoned, because we have no record of the phone call”. So I am left in the state where I cannot challenge. On the issue of reasonable charges that the hon. Member for Braintree spoke about, on amendment 50, a plumber who charged me a £50 call-out charge to come to my home, fair enough, but then to charge me a further £50 to look at the catalogue to find the part, when it is was absolutely clear that this could have been done within the time frame of the call-out charge—though having heard that the plumbing company had some links to the underworld, I decided not to pursue that. That is often the case.
I have also been waiting throughout this Committee to find the point at which I can find out from the Minister why, when I go to a coffee house, I know how much I have to pay for an extra shot, but when I choose to have fewer shots, I cannot have the price of my coffee reduced. These are serious points, when families struggle to make ends meet. We need more clarity about the rights of traders and providers of services to charge certain rates. I am aware that we have spent a considerable amount of time on these meaty, beefy, big and bouncy amendments, but I look forward to the Minister’s response.

Sheila Gilmore: I do not want to detain the Committee too much, but there are some good examples here of why this proposal is really practical and about things that really affect people, because sometimes it can seem quite abstract when we sit here debating Bills. I would like the Minister to say exactly what remedy and protection people have recourse to, because on Second Reading she seemed to believe that there was plenty in the existing law. I am sure that she will recall that I asked her a specific question on Second Reading and she assured me that there were adequate protections in the existing law and it was just a question of properly enforcing it. Will she expand on that? What are these protections, what steps should individuals take if they feel they have suffered considerable detriment and why does she feel that no further legislation is required on this subject? This has become a major issue and people who have contacted me often start by saying something such as: “I do not feel a particularly uneducated, unintelligent person and I am quite savvy online”. They really feel quite embarrassed, so I am not sure how many other people there are who would probably never admit that they have been affected.
Amendment 52 has perhaps attracted a little less attention. My hon. Friend the Member for Walthamstow spoke about leaseholders in her constituency. We do not have leaseholding in Scotland, but as my hon. Friend the Member for East Lothian touched on earlier today, many people are involved in factoring arrangements which are perhaps not so very different. Very similar issues come up where the home owner pays for many of the services.
The factor is the facilitator who draws it all together. That can be a very useful function in itself, and people who do not have factors sometimes find it difficult in blocks of flats, for example, to get things done. But the actual work of various kinds is carried out by somebody else. Very few factors actually do any of the physical work. They do not mend the lifts, if there are lifts, clean the windows or provide the insurance cover. They source all of that. A common complaint is that people feel they are given very little information and therefore very little choice in what they are paying.

Fiona O'Donnell: It is not just about the standing charge, it is about the extra charges. In the case of my daughter in a tenement in Glasgow when she wanted her name put on the call buzzer for the security system, the factor told her it would cost £50.60 to stick a label on it, but she was not allowed to use anyone else to provide that service. That is wholly unreasonable.

Sheila Gilmore: I thank my hon. Friend for that example. Insurance is another matter that has been raised. People do not necessarily know the terms of the insurance policy, which they are paying for, until something happens and they discover not merely, as in the earlier example, they might be paying for something that they should not be paying for, but that they are not covered for something they thought they had paid for, because they did not have enough information. Where other services are provided, I have had constituents complain that they have felt that the costs were quite high, but they were given no choice of contractor. Suspicions often came up over that. Whether they are right or wrong, I have had constituents who have been absolutely convinced that the factor simply gives the money to their pal in a cosy arrangement, about which they have no real say or information. From that point of view, amendment 52 is important.

Jennifer Willott: The debate has drawn to a close quicker than I was expecting, given the interest it has raised this afternoon. This is a large group of amendments with a common theme. I will take them in turn in the order in which they appear.
Amendment 50 on cost clarity and transparency is at the heart of what we are trying to achieve for consumers. It is not acceptable to lure consumers into a contract with a headline price offer that ultimately will not reflect the price that they pay as part of the deal. The wording in this clause already covers elements of the price to be given. It may be unavoidable to leave some costs unspecified in a contract. We have already discussed that in previous debates, but we are also doing what we can to make sure that as much information is disclosed to the consumer as possible before they agree a contract.
As I have said before, consumer contracts regulations will make it clear that the trader within the scope of the regulations must disclose all costs. Our view is that this must include unavoidable future costs, which the trader can reasonably foresee before the consumer enters the contract. That would be included in the information that they need to provide. Furthermore, where the costs cannot be reasonably calculated at the time the consumer enters the contract, as we discussed in the previous debate, the trader must inform the consumer how the price will be calculated.
The hon. Member for Walthamstow raised the issue of roaming charges on her mobile phone. She used the example that people cannot access wi-fi on a train when they were told that it would be available. If wi-fi cover was not provided and the train company said it would be, that would be covered under clause 50, so there would be a remedy for that. The additional data charges that would be built up would be covered by the unfair contract terms part of the Bill. If costs are not laid out in the contract and they suddenly go up or are hidden in the small print, that would be covered by that part of the Bill, which we will come to. Fees must be transparent and prominent; otherwise they can be challenged for fairness. If they are not transparent, regulators can take action, as laid out in schedule 3.
With regard to the pensions industry, pensions are regulated by sector-specific legislation. It is generally understood and accepted that particular issues in that sector need to be addressed. As it is a separate environment, it is appropriate to deal with those issues in specific legislation, when Parliament can discuss them in detail. The Minister responsible for pensions and Opposition spokespeople have discussed looking at the way pension companies charge, so that is already being considered.
The bottom line is that if the consumer does not agree the costs that the trader asks for, because they are excessive, the consumer does not have to pay that price. It is fair that consumers pay a reasonable price, and no more, for the service. That is what the Bill sets out.
Amendment 51 gives me the opportunity to reassure the Committee on some of the work that has been done outside the Bill, on midata and so on. It is good that the hon. Lady is interested in it, because not enough attention has been paid to the value and the potential impact of that important work. The Government are trying hard to reduce the cost of living for consumers and to help them engage effectively with the markets for essential services, so that they get better deals. In order to engage more effectively they need the right information.
As the hon. Lady noted on Second Reading, the midata programme has been working with industry to provide customers with their transaction data in four sectors: energy, current accounts, credit cards and mobile phones. The programme started in 2011 and now all the major energy companies provide consistent data, as a midata download, from customers’ online accounts. Most banks and credit card companies provide their customers with downloadable records of their transactions and some mobile phone companies do the same.
We are reviewing progress of the voluntary approach taken by the Government before looking at whether we need to use the powers under the Enterprise and Regulatory Reform Act 2013. In November last year, my hon. Friend the Member for East Dunbartonshire (Jo Swinson) when in this ministerial role, wrote to CEOs in those four core sectors. We are looking at two aspects of the midata programme. The first is whether the voluntary approach that we have taken with the companies has been sufficient in terms of their making the data available. The second aspect of the review is looking at the ways in which the information being provided can be more useful for consumers.
As part of the review process we are talking to businesses, consumer groups and third parties, to get their views on the best way forward to achieve the aims of the midata programme, and give people better information in an accessible form, so that it makes a difference to their behaviour. The review is looking at all of that and is due to be completed by the end of March, so that is quite soon.
Amendment 51 prejudges the outcome of that review with regard to the availability of consumers’ data and, importantly, does not address the usability of data, which is an important part of the programme. It is used to make a difference for people. The midata programme is now focusing on the ways in which consumers’ information can be made more useful to them, to remove the friction that stops them taking action to compare different offers from suppliers and so on.
The hon. Member for Walthamstow raised the issue of how to get people to club together in group switching and so on. That is already happening in the UK; progress is being made. The Which? Big Switch campaign had thousands of people sign up for a collective approach to cheaper deals. A number of hon. Members will have come across that in their constituencies. The Department of Energy and Climate Change has also been working with local authorities to negotiate better deals for their residents.
There has been some progress in getting people to switch banks. The current account switching service, which I think the hon. Lady mentioned, launched in September and early figures from the Payments Council show that more than 300,000 people switched in the final quarter, which is a 17% year-on-year rise. By making switching an easier process, people are starting to do that more often, although we can do more.

Andrew McDonald: Is not the spirit of our amendments to try to put the power that has been vested in the energy companies for so long into the hands of the consumer? In 2002, the average monthly spend on household energy was the equivalent of £69, as opposed to £106 in 2012, which is a 55% increase. The Government have that information and cannot blame that on wholesale prices. It is the consumer who has paid and we are trying to put the balance back in favour of the consumer.

Jennifer Willott: To be fair, midata is a Government programme that has support throughout the House. It is important that consumers have the data they need to be able to make switching a reality. Many companies rely on inertia: people do not switch, so they can put prices up without making much of a difference to people’s behaviour. If we want to drive competition in those sectors—including the important energy sector—one of the most effective ways to do that is to get people to look for the best deals and switch. Making that process as easy as possible will encourage people to switch, because that is still a barrier for people. We need to make it as easy as possible for people to use the data, but all the energy companies do now provide that to customers, so they can use that to switch.

Andrew McDonald: The Minister is being very helpful. There is a terrific amount of common ground here, but, on the ability to switch, people may have the power of information in their hands, but the risk is that they will switch from one supplier who charges too much to another who also charges too much but just a little less. That is not a fair deal for the consumer.

Jennifer Willott: The hon. Gentleman makes a point about whether the market is competitive in the first place. That is slightly outside my remit. We are looking at ensuring that consumers have the information they need to make the best use of that. If they are accessing information about their energy habits to get a much more accurate reflection of what their bill would be with different providers, as long as we ensure that we identify the most effective way for them to use that information to understand what their costs would be with different suppliers, they will be more empowered to make a decision on what is the best deal for them. That will not resolve everything in the market, but we probably all agree that the more information consumers have on their purchasing behaviour, energy usage, rights and remedies and so on, the more empowered they are and the more likely they are to be able to make good choices. That is what the midata programme is about.

Stella Creasy: We all agree with that. That is why we tabled the amendment, which is about the value of data in empowering consumers. Given that the midata project has been running since 2011, why does the Minister think that British consumers are not using that information to switch? Does she accept what Archna Luthra of the Cheap Energy Club said, which is:
“The key, key limitation in the market right now is consumers’ ability to get the information they need to switch.”?
Firms provide only the information that they want and not necessarily the information that is needed. Does she agree that, for the midata project to be successful, it needs to overcome that? It has not done that yet.

Jennifer Willott: I am not sure that I necessarily agree with the hon. Lady. As I said, the current account switching figures show a significant increase and all the energy companies now provide data to customers to allow them to make a judgment about switching. My understanding is that not all the switching websites use that in the same format and it can be difficult for people to use that. More work needs to be done to look at how we enable people to access their data in the most helpful way. As I said, that is one of the things being looked at in the review, which comes out at the end of March.

Stella Creasy: We know the reason why bank switching is taking place; it is because there has been a standardisation of the switching process. Far be it from me to upset the hon. Member for Braintree, but there has been state intervention, or a recognition that there was a problem in being able to switch, and there was inconsistency of switching in the banking sector. That was nothing to do with the data accessed by consumers themselves; that has been run by the Payments Council. Every example that the Minister gives further highlights why we need to get companies to engage in a way that works for consumers, which is what the amendment seeks. Right now, under the voluntary approach, they do not.

Jennifer Willott: I disagree with the hon. Lady. There is a review to look at the powers in the Enterprise and Regulatory Reform Act. However, the voluntary approach has led all the energy companies to provide the data. They provide the same data in the same format for customers, so there is continuity and consumers can use it. As I said, we need to look at ways to make it easier for customers to use that to be able to identify how to switch. The data are being provided in a comparable form so that people can compare different companies to get the best information. It would be sad to ignore the progress that has been made, when it is, as she identified, really important that people have the information, and progress is being made. I am sure she will be very interested in reading the review when it comes out at the end of the month.
The hon. Lady also mentioned the data that supermarkets hold. It is absolutely true that they hold valuable data on customers’ spending habits, lifestyle and so on. The 2012 consultation suggested that the financial benefits to consumers were less obvious than in other areas. However, there is an opportunity for the sector to engage better with their customers and to build trust and loyalty by engaging with their customers. I would encourage innovative businesses in the sector to consider making the data and the services available to their customers.
There is scope to extend the power in the Enterprise and Regulatory Reform Act into supermarkets if it were felt appropriate, although that would need to be subject to further consultation, and it would be subject to restriction under section 89 of that Act, but it would be possible to do.
Privacy issues to do with midata were raised. The midata programme set up working groups involving industry and consumer groups to consider the privacy and trust issues relating to midata. They looked at a range of consumer protection and trust issues. A report will be published soon and a copy will be placed in both Libraries. The report will conclude that there are no unique risks posed by giving consumers access to their consumption and transaction data. The Data Protection Act applies to midata, as it does to other personal data. We have already debated that at length today. The scale of risk, however, may be increased if data are brought together from different sources, and the report recommends that the Government produce guidance specific to midata. The report will be placed in the Library shortly.
Amendment 52 returns to the core of clause 51, which sets out the consumer’s right to pay a reasonable price for a service where the method of calculation is not set out in advance. It addresses the factors highlighted by the hon. Members for Edinburgh East and for East Lothian. The Bill makes it clear in clause 2, right at the start, that where a trader subcontracts work, the trader with whom the consumer has a contract will still be liable for the statutory rights. So if the subcontractor does not provide the service with reasonable care or skill, the trader will be liable and the consumer would be entitled to a remedy. Clause 2 makes that link clear.

Sheila Gilmore: The issue, however, is not necessarily about getting a remedy, but about having awareness of the terms, for example, on which people are being asked to make payments. It is an informational issue and I am not convinced that clause 2 covers it.

Jennifer Willott: Clause 2 ensures that responsibility for the subcontractor resides with the trader with whom the consumer has a contractual relationship, so that it is very clear where the responsibility lies. If there is a lack of information it is clear that it is the trader who has a contract with the consumer who is responsible for providing that information, rather than being able to fob it off on to the subcontractor. If a consumer has an issue about that relationship, it is clear that the responsibility sits with the trader with whom they have the contract. The clarity is there as to who is responsible.
As I am sure the Committee knows, there is other legislation to protect consumers from hidden charges, costs and surcharges. In 2012, earlier than required, we brought in regulations on payment surcharges which mean that traders within scope cannot charge consumers more than the cost borne by them for accepting a given method of payment. I am also sure the Committee knows that a consumer has to agree expressly, as we have now discussed many times, to any payment additional to the payment agreed for the main obligation under the consumer contracts regulations for services that are within scope. This goes back to the issue of pre-ticked boxes and so on, so consumers are protected from hidden charges and do not lose their rights and access to remedies if a trader subcontracts to another—the remedies and rights in the area of hidden charges still apply.
Amendment 53 concerns the same clause but from a different angle. The amendment is unnecessary because the Financial Conduct Authority’s conduct of business rules already cover the provision of pre-contract information by insurers. As for the requirement to disclose risk information in the amendment, I am concerned that it could have an adverse impact on the insurance market. First, underwriting is a source of competition between insurers and disclosing that information and the risks that were taken into account in calculating the premium would result in disclosing the business model of an insurer. Secondly, different insurers take different criteria into account when calculating risk and place different weight on those criteria. Because the method of calculation varies among insurers, there would be no consistency among different providers and it could serve to confuse rather than help consumers to make the right decision.
I would also argue that there has been little demand for consumers to understand how their premiums are calculated; they focus instead on the price and the terms and conditions of the policy. This could be seen as providing too much information, of giving consumers information overload, as we have discussed before.

Fiona O'Donnell: Does the Minister think that it is acceptable for an energy company to tell a consumer, “We will not remove the prepayment meter from your property because of the postcode you live in,” when someone takes up a new tenancy or becomes the new owner of a property? Would this provision prevent that? Does that consumer have the right to understand why the energy company has made an assessment of risk based on postcode?

Jennifer Willott: I have to confess that that is a totally different issue. That would be covered under the sector-specific regulation covering the energy sector and would not come under the Bill. This amendment talks about the information that insurance companies should or should not provide to customers.

Mark Durkan: The issue would apply, however, in respect of insurance which varies, for instance, because of someone’s address. People are charged one premium if they live in BT47 in my constituency, for instance, and a much higher premium if they live in BT48.

Jennifer Willott: Yes, absolutely, and that information should clearly be available to consumers. That is almost the point that I was just making, which is that there has not been demand for people to have a breakdown of exactly how an insurance premium has been calculated. The issue for most people is price. Clearly, insurance companies are often prepared to raise the headline stuff, such as whether a different postcode is treated differently. For many years, Cardiff and Swansea were known as the car crime capitals of the UK—as a fellow resident of Cardiff, the hon. Member for Cardiff South and Penarth will back me up on that. If someone moved from Swindon to Cardiff, their insurance might double overnight, based on the risk. However, the premium calculation is often the competitive advantage of a business. If we required insurance companies to provide it, it would effectively expose their business model, which would make it extremely difficult for them to operate.
On the requirement to disclose profit related to a policy when no claim has been made, information on expected profit if there is no claim on a policy can be speculative at best, because insurance works on pooled risk. If there is no claim on a policy, it does not necessarily mean that an insurer makes a full profit on it. That depends on the circumstances and the risks contained in the pool that the policy is in. A requirement for insurers to provide such information, even if that were possible, would be overly burdensome and make little sense to many customers—it would probably not be in the consumer’s best interests.
Many hon. Members feel strongly about amendment 54, on misleading websites. Everybody agrees that sites that palm themselves off as legitimate Government services need to be stopped. I said that on Second Reading and repeat it today. We have seen examples of people who have been conned—a number of examples have been given today. People pay out sums of money on websites and do not realise what it is for. HMRC lookey-likey websites were mentioned on the radio recently. Many people were caught out and paid charges when they thought they were paying their tax. Clearly, a lot of people feel very sore about that.
There is no doubt that consumers are being ripped off by rogue websites. I therefore sympathise with the amendment and the spirit of it, and the Government are taking quite a lot of action on the matter. We are working and will continue to work with organisations such as the Advertising Standards Authority and Which?, and the major search engines, including Google, to raise awareness of the threat posed by misleading websites. As a number of hon. Members have said, sites tend to come to people’s attention via sponsored adverts on search engine result pages, which come at the top of the list. The Government Digital Service has been working with Google to identify advertisements that mislead consumers and that have therefore breached Google’s policies. As a result, Google has recently taken down a series of sponsored adverts that have misled people.
In addition, we need to ensure that the law is effectively enforced, so I am pleased to announce that the National Trading Standards Board is to have an additional £120,000 this financial year to investigate such rogue traders. The extra funding will help trading standards to identify and investigate any examples of misleading websites that pass themselves off as official Government websites, and to enforce the law. We have heard of examples of those today. The money will go directly to those on the ground to enable them to enforce the law and protect consumers from rogue websites.
The Government are also introducing private rights under consumer protection regulations on misleading practices. Consumer remedies will include a consumer right to unwind a contract if it is entered into through a misleading website and to get their money back. We will introduce that later this year. It will mean that people have a private right to take action if they have been misled. As well as the higher-level action under consumer protection regulations, people will have a private right to unwind a contract and get their money back. As I have said, we will introduce that in the next however many months to improve consumer protection for those who have been caught out by such websites.

Sheila Gilmore: Why is it necessary to do that separately and what is the time scale?

Jennifer Willott: The consumer protection regulations already exist and offer protection in respect of misleading websites. Currently, they enable enforcement agencies to take action against misleading websites. Within the regulations, we are extending that to enable consumers to take private actions as well, so that they can unwind the contract and get their money back. The regulations cover that matter and are by far the most appropriate way in which to extend the power. I cannot give the hon. Lady information about the time scale at the moment, because I cannot remember it, but I will come back to her to clarify the time frame.
Clause 51 is important to both traders and consumers. Given the extra funding we are providing to the National Trading Standards Board to tackle misleading websites and the explanations I have given about other areas, I hope that the hon. Member for Walthamstow will withdraw her amendment.

Stella Creasy: These have been illuminating amendments with an illuminating debate, for a number of reasons. If I understand what the Minister said, she argued that matters raised by amendment 51 are already dealt with in the legislation through claims that are made and that there is sector specific legislation for pensions. I am therefore happy not to press the amendment on that basis. Before we move on to the other amendments in the group, I am also happy not to press amendment 53, on the basis that she argued that people being charged for things that they could not possibly have known about is dealt with in other parts of the legislation.
I am surprised by what the Minister said about amendment 54. It feels inconsistent to those of us who are concerned about copycat websites that she suddenly announces that there will be a private right to unwind a contract. Why would that not be part of a consumer rights Bill? It seems analogous to the rights in the Bill. The Committee is after all debating various forms, contracts and unfair terms that might apply. It is of concern to us. I saw the Department’s press release that set out that the Consumer Rights Bill was relevant to copycat websites and yet the Minister on Second Reading said that there was no need for further legislation. She now suggests that there will be further rights and further legislation. If she can point to why the Department is indicating that the Bill deals with copycat websites, when we cannot see where that comes from, it will be incredibly helpful to the Committee.

Jennifer Willott: May I clarify? The hon. Member for Edinburgh East highlighted the consumer protection regulations, and the hon. Lady has just mentioned them as well. We have already published in draft the changes that we propose. They are in another framework because they fit within those regulations, which already relate to that issue. The changes have been published in draft and we are considering the comments on them before finalising them. The time frame is short, in that we are part way through the process, but we making changes in those regulations rather than the Bill, because they fit in that framework and the regulations have been in place for a number of years.

Stella Creasy: The Minister must accept that the Bill gives consumers the right to request a price reduction for services, for example, or to request their money back for goods. If they felt that they had been mis-sold a good or were being mis-sold a service, they might want to unwind that contract. Where would that fit in with the elements of the Bill? It is not unfair to ask whether those things should fit together. I am concerned, because it is difficult for the Committee to judge whether the changes will deal with the issues that people experience.
I go back to my original question to the Minister: given that the Department has flagged up the Consumer Rights Bill in relation to copycat websites, can she point us to where, as currently drafted, it deals with them? That would be incredibly helpful, because it would address the reason we tabled the amendment. We are happy to withdraw it if she explains why she has linked the two in public pronouncements—for example, the announcement today about the money that is coming from Trading Standards. It would be useful to know where the link is with the Bill.

Jennifer Willott: The Bill pulls together all the enforcement powers that Trading Standards has. We are talking about the money going to the National Trading Standards Board. The schedules pull together the enforcement powers that Trading Standards has. It has responsibility under the consumer protection regulations in some areas to take action against some of the misleading websites.

Stella Creasy: The Minister is suggesting that the powers currently in the Bill will deal with the problems from copycat websites. I hope we will be provided with more clarity on where the crackdown will come from. It seems that she is suggesting that Trading Standards will be able to deal with whether these sites are legal or not legal. The issue for consumers is that the sites provide an additional service and whether that comes at a fair price. Will she help us to understand how Trading Standards is going to assess a fair price for an additional service in order to be able to act on these problems, if she is saying that redress lies within this clause?
The prices that these companies are charging are for an additional service. Where consumers want to challenge the price because they feel it is unfair, how will trading standards determine what is an unfair price for a service that is legitimate in some contexts? As I am sure the hon. Member for Braintree would say, we may want a service that allows a passport to be assessed, but we would be concerned if we paid £70 or £80 rather than the £10 we might pay at a post office. How will trading standards determine a fair price?

Jennifer Willott: Clause 51(3) sets out that reasonable price is a question of fact, to be determined by the courts. I think the point raised earlier by the hon. Member for Braintree is that there are two separate issues. My understanding is that a lot of misleading websites do not provide an extra service; they charge a fee to do something that people can do equally well themselves. Other websites provide a service for which people are prepared to pay an extra fee. Where somebody is paying a fee for an extra service, I agree with the hon. Gentleman that it is not for the Government to determine that fee—the market should do that. We are talking about cracking down on websites where no extra service is provided and the website is misleading and encourages people to pay extra money for something that they could get significantly cheaper through a free Government website. We will do that with extra money for the National Training Standards Board, the right to unwind a contract and get money back, and the work we are doing on taking down material from search engines. I agree with the hon. Gentleman that the hon. Lady has conflated two separate issues.

Stella Creasy: I think there is a reason for the conflation. In some circumstances people can apply for their passport without needing an additional service to check it. They may take the chance that they have filled it in perfectly, but the provision of an additional service gives them the extra security of knowing that if they have missed something out, their passport will not be delayed. That is where there is an overlap.
I take the Minister’s point. She believes that trading standards will have the resources to be able to crack down on those sites and draw a clear demarcation between a site that fills in a tax return for free, and one that advises people on how to do it. I am a little sceptical about that and I hope the Minister will keep it under review. I suspect and fear that just asking national trading standards to determine a fair price for an additional service, and which sites require an additional service and which do not, will lead to a number of court cases. Given the amount of money a number of companies are making, they will claim they are providing an additional service. Tax Return Gateway continues to maintain that it is providing a fair additional service. Those of us who have looked at the site do not believe that. The amendment would provide additional clarity.
I am interested in the idea that the Bill simply provides the funding for trading standards, which is what the Minister seems to be saying. That does not quite accord with the press release. Nevertheless, I am happy not to press amendment 54.
I am not happy to withdraw amendments 51 and 52. On amendment 51, I was extremely surprised that the Minister chose not to talk about the public sector. Her response did not mention the public sector. She suggests that companies will release data showing prices of their own volition, so there is no commercial or competitive advantage for them to do so. She suggests that there is no inertia in the midata project, and that progress has been made by the big switch campaign, in the face of all the campaigners saying that the problem is that they cannot get the data in the format they need.
The Minister did not talk about next generation intermediaries, which are the key to helping large groups of consumers to deal with inequality. We therefore wish to press amendment 51, because it reflects our commitment to ensuring that consumers are truly empowered with information and is a key element in how Labour sees consumer rights unfolding in this country. We also want to press amendment 52 to a Division. We are not convinced the Minister has satisfied our concerns that people are being overcharged when they pay for contracts when the contract itself is taken out on behalf of a third party. We therefore want to test the Committee’s view on whether leaseholders should pay for an insurance company service for terrorism when they cannot tell whether the price is fair. We would like to vote on amendments 51 and 52—to us, that seems to be a simple principle—but I beg to ask leave to withdraw amendment 50.

Amendment, by leave, withdrawn.

Amendment proposed: 51, in clause51,page31,line3,at end add—
‘(4) To enable consumers to assess whether the price they are paying for a service is reasonable, and no more, and with regard to the provisions of section 50(1), the Secretary of State will—
(a) under the power set out in section 89 (Supply of customer data) of the Enterprise and Regulatory Reform Act 2013 enact regulations to require all regulated persons to provide customers with data regarding their personal use of a service,
(b) specify in a report presented to Parliament within three months of Royal Assent of this Act which traders operating as a business as defined by section 2 shall be considered regulated persons including any government, or local or public authority and therefore identify a relevant regulatory body to undertake the duties set out in paragraph (c),
(c) having regard to the powers set out in section 89(8) of the Enterprise and Regulatory Reform Act, require regulators of services provided by regulated persons to submit a report within three months of Royal Assent of this Act on guidance to include—
(i) the provision of such data in a format which enables the consumer to assess whether the price they are paying for a service is reasonable including but not limited to the description set out in section 89(7) of the Enterprise and Regulatory Reform Act 2013,
(ii) the provision of guidance that can enable third parties to make a request for this information with the consent of the consumer including measures to limit the total charge that can be applied for any such single request for data on behalf of multiple consumers,
(iii) requirements for those who hold data on consumers on behalf of any government, local or public authority to seek to use this information to secure social and consumer benefits for its application as directed by the Information Commissioner,
(iv) requirements for all regulated persons to recognise that primacy of ownership of any data generated directly in the course of a contract with a consumer at any point in its execution lies with the consumer and as such any decision requiring the transmission of this data in a format where the consumer can be identified to a third party by the trader must secure the direct consent of the consumer,
(v) requirements for all regulated persons to make available upon request to a regulatory body information pertaining to their management of non personal data collected in the course of interactions with consumers by traders for the purposes of enabling regulatory bodies to assess whether the rights of consumers to a reasonable price for a service have been infringed,
(vi) guidance for the trader to clarify their ongoing responsibility for the security and accuracy of data held on consumers whether the consumer continues to maintain a contract with the trader or not, and
(vii) guidance for all regulated persons on ways to make publicly available information about how consumers may exercise their right to access data for the purposes of being able to make decisions on contracts for services.’.—(Stella Creasy.)

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 10.

Question accordingly negatived.

Amendment proposed: 52, in clause51,page31,line3,at end add—
‘(4) Where the consumer is required to pay for a service via a third party as part of another contract, for the purposes of assessing whether the charges they are required to pay are reasonable they will have a right to the full details of any contract including all charges and costs to which they are contributing.—(Stella Creasy.)

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 10.

Question accordingly negatived.

Clause 51 ordered to stand part of the Bill.

Clause 52  - Service to be performed within a reasonable time

Stella Creasy: I beg to move amendment 55, in clause52,page31,line12,at end insert—
‘(3A) For the purposes of this Act, where the service provides assistance to the consumer for what can reasonably be considered serious loss of—
(a) livelihood,
(b) primary living accommodation, or
(c) household earnings
and such a service would be considered their primary redress for such a loss, the impact of any delay in provision of this service on their quality of life can be taken into account in determining what timeframe is considered reasonable.
(3B) Considerations under subsection (3A) do not affect the right of consumers to seek other remedies for a breach of contract at a later date regarding delay in provision of compensation.’.
I hope our consideration of the amendment will be relatively straightforward and quick. The amendment is timely because I am sure that in recent years many Members have dealt with constituents who have experienced either floods or riots in their local communities. Members will therefore be very conscious of the importance of people’s ability to make an insurance claim and of the need for that to be dealt with promptly and fairly, especially when that insurance relates to loss of livelihood or household goods. Such damage has a huge impact on people’s lives and they are unable to recover without the additional payments from insurance.
We know that insurers play a crucial role in helping customers who are affected by a disaster, and that the vast majority of claims are dealt with within nine months, although there are some cases when even waiting that time can have a significant impact on consumers’ livelihoods. Many hon. Members will recall how some of those affected by the riots had their shops burnt down. They were therefore not able to trade, and lost their income or their livelihood. Members will recall the financial impact that that had on them. I am sure that, with the floods at the moment, Members will have constituents whose houses are uninhabitable and could be uninhabitable for some time and who are facing severe financial hardship as a result.
The amendment seeks to strike a balance between setting an artificial time limit on dealing with a claim and recognising that there are some circumstances in which a service should be provided in a reasonable time. The concept of reasonableness should include the impact on a person’s livelihood or household, so that we are not asking people who are made homeless to wait months on end. Any delay in resolving such a claim would be considered unreasonable because of the impact. It would be interesting to hear whether the Minister thinks we can protect consumers who face such problems—through the amendment or in another way within this legislation—from waiting such a long time, and from experiencing further hardship and detriment as a result. How can we take that into account when judging what is reasonable? That is why the amendment has been tabled.

Jennifer Willott: I assure the hon. Lady that I support the good intentions behind the amendment and the principle of protecting consumers in that situation. Such situations have been all over our TVs and newspapers over the past couple of years and thousands of people are affected. However, the amendment is based on a misunderstanding of the treatment of insurance claims for such life-changing events as flooding.
Where insurance is the primary redress for a loss of livelihood, primary living accommodation or household earnings—for example, property insurance paying out for flood or riot damage, as the hon. Lady highlighted—there are important processes that need to be part of meeting the contract or that have an impact on the time taken to pay the redress. For example, a flooded property can take many months to dry out and it is essential that a property is fully dry before any renovation takes place. In the spirit of sharing our experiences, I know that personally because my flat was flooded last year. It was flooded in July and it still had the industrial dryers in there in September, trying to dry the place out before anything could be done to re-paint and repair and so on. It can take a really long time to get properties dry before one can take any of the next steps.
In my experience, insurers take their obligations very seriously and the impact of the loss to the customer is very important to the insurer. Interim payments are made and temporary accommodation paid for as part of the redress to meet those needs, but certain processes take time regardless of the impact on the individual. There is no benefit for insurance companies in dragging out a claim. In property-related claims, that will only increase costs for the insurer, particularly if they are paying for temporary accommodation while the claim is progressing. Therefore, although I understand the intention of the amendment, I am concerned that a standard approach may lead to unintended consequences and consumer detriment.
A time limit may provide a perverse incentive to rush people back into their homes and close the claim in order to be within the law. That might mean people being put back into their homes before they are fully dry or properly fit for human habitation. Having lived in a very damp flat with a very small baby, I can tell the Committee that it is a very unpleasant experience that we do not want to happen to people. Encouraging companies to focus on a shorter time frame may encourage rogue traders to undertake quick, shoddy repair work while claiming they can meet deadlines. That would not be to the benefit of consumers either. Customers rightly need to prove loss in order to validate their claim, so artificial deadlines may encourage fraud, cutting corners or whatever, to try to get a claim put in more quickly.
The amendment is unnecessary. As the Committee will know, the Bill sets out key consumer rights and what people are entitled to if something goes wrong. That includes a requirement to receive a service within a reasonable time frame and remedies if the service is not performed with reasonable care and skill. The insurance industry complies with all-encompassing consumer protection and redress rules set down by the Financial Conduct Authority, which in many cases exceed the measures in the Bill. The Financial Ombudsman Service also provides an independent service for settling disputes between businesses providing financial services and their consumers. A ruling made by the service is binding on the financial service provider. The protection goes further than under the Bill. With that, I hope that the hon. Lady withdraws her amendment.

Stella Creasy: I thank the Minister for her reply. However, she was arguing that the amendment is both unnecessary and mistaken. She is now saying that members of the public would have recourse to the concept of what a reasonable time scale is. We had specifically not put a time scale in the amendment. Our point is that, if people are badly affected by things such as floods and lose their homes or livelihoods—we have seen people lose their farms in some of the flooding areas—that could be taken into account in any delay in resolving the issue. If there is any substantial delay, the home owner or the person in question could raise that as a concern. It would be helpful if the Minster could set out whether that is an appropriate test within the concept of a reasonable time scale for a service, or whether it is already covered. I am not quite sure which she is saying. She seems to be saying both.

Jennifer Willott: The point is that what needs to be taken into account when assessing what is a reasonable time frame is the damage that has been done, and what needs to be done to improve the situation and repair the house or whatever it may be. The impact on that particular individual, severe or not, does not affect how long it takes to dry out a property. The reasonableness of the time frame needs to be based on what needs to be done by the insurance company to put the property back into its earlier position, rather than on the external circumstances of the consumer.

Stella Creasy: In a sense, then, the Minister’s argument is that it is wrong to take into account the impact of any delay on the consumer. That is our concern. I am sure Committee members representing areas that have been flooded will be very worried about telling their constituents that it is the drying-out process that matters, not the fact that they have lost their livelihoods. We all recognise that there is an issue about drying out properties and making sure they are habitable again, and not wanting to encourage rogue traders. I encourage the Minister to see whether there are concerns. I dealt with riot victims. People waited a substantial amount of time for support and therefore could not put their lives back together. The concern when we look at some of the flooded areas is that there may well be people who will wait a substantial amount of time and whose lives may be affected. We are looking to how we might include that. Hopefully that will give a bit more succour and give people confidence that they matter as well as the buildings.

Jennifer Willott: That is why the insurance industry is regulated by the Financial Conduct Authority, which will take into account the circumstances and the handling and the operating standards that are applied in insurance firms. Part of that will be looking at how they handle claims, making sure that claims are handled fairly and promptly, and ensuring that the delay is not in that process. Specific regulation applies in those areas. As I have said, in many cases it exceeds the measures proposed in the Bill. That is why it is more appropriate for insurance companies to be covered by those specific regulations, which take into account all of those circumstances and can be enforced through the FCA and the Financial Ombudsman Service.

Stella Creasy: Either the impact on the consumer and the individual matters, and therefore we find a way of ensuring that that can be taken into account in the rare circumstances where somebody’s life is disrupted by a flood or a riot, or the ability of the insurance company to put right the situation created by the riot or the flood matters. I do not think it is terribly clear. I recognise that the Minister is saying that the amendment may not be the right way to make it clear, but I want to put our concerns on the record. For our constituents who may be sitting in damp properties, it is not simply about whether they can dry out that property, but also about whether they can continue, for example, their business, or to live in that property as a family. The impact on them should be considered to be a question of “reasonableness” as well. Asking people to wait months on end is obviously very distressing for them. Not to take into account the impact of that distress when considering whether there has been any delay in dealing with a claim—and we have seen delays in those claims—is also very distressing.
I am happy to withdraw the amendment but I want to put our concerns on record. The Government do not seem to have thought through how that concern for individuals can be expressed. With the floods and all the compensation claims we are going to see, that will stick in the craw of some of those people still bailing out their properties.

Amendment, by leave, withdrawn.

Clause 52 ordered to stand part of the Bill.

Clause 53 ordered to stand part of the Bill.

Clause 54  - Consumer’s rights to enforce terms about services

Stella Creasy: I beg to move amendment 56, in clause54,page31,line30,at end insert—
‘(2A) The trader shall provide the consumer with full details of their relevant statutory rights under a services contract before the point at which the consumer seeks to challenge whether these rights have been met. This shall be done within an appropriate, retainable format and within a reasonable time of contact with the trader for this purpose to enable the consumer to exercise their rights.’.

Sandra Osborne: With this it will be convenient to discuss amendment 58, in clause54,page32,line6,at end insert—
‘(6A) In seeking to enquire about the terms of their contract, possible breaches of their statutory rights or enforce terms about service, a trader cannot charge the consumer for seeking to communicate with them.’.

Stella Creasy: This matter will be familiar to the Committee because, having also had the argument about what information consumers should get at point of sale, we have also been trying make sure that people have consistent information at point of complaint. That is what amendment 56 does by applying the same principles we applied about not just knowing that there are statutory remedies, but actually knowing what they are, to a service provision context. I will therefore not repeat what I said about that, but the same arguments apply and I am sure that the implementation group, our favourite pregnant panda, will be brought into play in this instance.
Amendment 58, however, is a new issue for us and is something many of us will feel strongly about. It is when people have to pay to complain. If someone has been sold a service that is not of an appropriate standard, calling up and paying a premium rate phone number to seek redress and exercise rights seems to add insult to injury. This amendment does something very simple and seems an easy principle of natural justice. Someone should not have to pay when inquiring about the terms of a contract, possible breaches of statutory rights, or enforcing a statutory remedy. When perhaps ringing up to arrange a repeat performance of a service or to query a service that has not been provided properly, someone should not be charged for making that call or request.

Brooks Newmark: I am highly sympathetic to what the hon. Lady says, but to be clear: is she saying that the company should provide a freephone service or that it is perfectly all right for the customer to pay an ordinary BT charge? I assume that it is the additional charge to which she objects.

Stella Creasy: Yes, it is the additional charge. The phone line a consumer uses to contact them is the consumer’s choice, but if someone calls them and has to pay for an 08 number—and therefore a premium— to call them, we do not think that it is fair if calling to exercise rights. That is where this amendment comes from. We all know that there has been massive concern across the House about the use of premium rate numbers and the cost that people pay, because the access charge is currently unregulated. It can be as high as 40p a minute on top of the service charge. Even where people increasingly use online mechanisms to complain about issues, the vast number of people still use telephones and therefore pay some of these premiums. Telephone calls still account for 43% of all customer contacts.
Central Government websites are, I am afraid, a particular offender in some of these instances. We were just talking about the floods. Anybody who tried to call Floodline will know how expensive it can be. It is estimated that it has cost callers using 084 numbers for Government services £56 million in the last year, and 63% of calls to central Government services were higher-rate telephone numbers. That is clearly an extreme expense for people to pay when they call to complain or find out about a particular service. We do not think it is fair that people should pay to call to find out about their basic rights. Surely, there is a difference between a premium rate line that someone might call for a particular service and calling to complain. Therefore, we think it should not be acceptable for companies to use premium rate numbers to pay for complaint lines.
We are not alone in thinking that. Ofcom also believes that the public should not have to pay to complain. It has put forward some voluntary guidelines about using these premium rate numbers. It also encourages public not-for-profit bodies to use 03 rather than 08 numbers, to make it clearer to customers that they should not have to pay for them and what the cost would be, especially if calling from a mobile. We think this amendment is a fairly simple principle. I hope that Government Members, and certainly the hon. Member for Braintree, understand that this is not the dead hand of the state, but simply a question of natural justice. I am sure he is ready to stand up and tell us why he has suddenly changed his mind. Perhaps he has made a phone call to a premium rate number himself.

Brooks Newmark: I am highly sympathetic to what the hon. Lady says. My constituents, like all of our constituents, do not like the thought of being charged extra money to complain about a problem where the provider is at fault. I hope the Minister will be able to give us some encouragement that the Government are already dealing with this pernicious behaviour of many service providers.

Stella Creasy: I am sure the Minister will point to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, regulation 41, which states:
“Where a trader operates a telephone line for the purpose of consumers contacting the trader by telephone in relation to contracts entered into with the trader, a consumer contacting the trader must not be bound to pay more than the basic rate.”
The amendment mirrors that requirement but would give it statutory force, because we know the problem is still ongoing. The regulations come into force in June this year, so it would be helpful to hear from the Minister whether progress has been made. Given that we expect this behaviour of companies, why would we not wish to make it a statutory requirement, so that people are not paying over the odds when they have already been sold a dud of goods or services?

Brooks Newmark: I am trying to understand what the hon. Lady is trying to get at. I understand that the Government are dealing with this issue. It sounds like she is trying to create some form of belt and braces around what the Government are already doing. While I am sympathetic to what she is saying, as is everybody in the room today, I am sure that the Government, as represented by the Minister, will give us comfort that her concerns are already being addressed by the Government.

Stella Creasy: I am surprised if the hon. Gentleman does not think he also represents the spirit of the Government. We are unleashing his free spirit. I am sure there is a complaints hotline somewhere that somebody will call as a result.
We are simply trying to enact what is in the spirit of those voluntary regulations about not requiring people to pay and give it real meaning, so that consumers cannot be ripped off by a complaints line. It would be helpful to hear from the Minister whether there has been progress towards that, given that it is a fairly simple principle of consumer rights that someone should not have to pay to complain. That could be a barrier to exercising the various remedies that are available.
I look forward to what the Minister has to say. If she does not think the amendment will ensure that people are not ripped off when raising a complaint, will she tell us whether other action is being taken to address the problem? All of us have seen people who have had to pay over the odds to ring and complain about a service. That just adds insult to injury.

Jennifer Willott: I shall speed quickly through amendment 56 on information for consumers. We have discussed this many times now. As the hon. Lady predicted, it is one of the issues that the implementation group is looking at. The point of the group is to look at the way that information is shared with consumers at the different points of the process, whether for goods, digital goods or services. All that is being considered by the implementation group and does not need to be in the Bill.
With regard to amendment 58, a key aim of the Bill and the Government’s wider reform package, is to empower consumers and give them rights and the confidence to fight their corner when something has gone wrong. We know that all the rights in the world do not work if someone cannot reach the trader because they do not know how or it is too expensive to do so. As the hon. Lady and my hon. Friend the Member for Braintree mentioned, work on that is already in hand.
We made it clear in the consumer contract regulations that traders must give contact information pre-contract. The regulations also require that where a telephone number is offered to take post-contract queries, the consumer must not have to pay above the basic rate. That is already laid out in the consumer regulations which, as the hon. Lady said, are to come into force in June. She asked for feedback but clearly we cannot have feedback until they are in force.
I was slightly confused by something the hon. Lady said. She said the requirement needed to be in the Bill to have statutory force, but there is no difference between the regulations and the Bill. They both have exactly the same binding force. The fact that they are in the consumer contracts regulations means that they have exactly the same legal force as if they were in the Bill.
Not being able to charge more than the basic rate is a significant change for business. I hope it signals that we are really serious about ensuring that customers are not only given rights, but have the power to enforce them as well. The hon. Lady mentioned that this is an area where consumers have been charged significant amounts to contact traders when following up something that has gone wrong, when it was not their fault.

Fiona O'Donnell: Will the Minister also keep an eye on when consumers phone with a complaint? They are given a number of options—press 5 if you are making a complaint, for example. Can she ensure they are not held waiting much longer than someone perhaps calling to place a new order?

Jennifer Willott: I suspect that that will vary significantly, depending on the size of the company and how possible it is for them to do that, but it is important that it is not unaffordable for people to be able to complain if something has gone wrong. If they have paid money and something has happened, it is not fair if they are not then able to enforce their rights. Clearly, it is important to get that right. I have heard about consumers who have not pursued cases because it was too expensive to pursue when the fault was discovered, and that is not acceptable. From June, traders will be able to charge for a basic rate phone call, which will help protect consumers.
The hon. Member for Walthamstow also mentioned Government Departments and helplines. I agree that it is not appropriate for vulnerable people to pay high charges for accessing vital public services. The Government are clear that we need a more consistent approach. The Cabinet Office published guidance for consumer service helplines on 26 December—I am sure everybody spent their Boxing day reading what was on the Cabinet Office website—and there is a standing remit to keep that up to date. The guidance makes it clear that where a non-geographic number is needed—a central one—Departments should use an 03 number for the provision of core public services. In the Department for Business, Innovation and Skills, all of our public-facing 0845 numbers have now had their 03 equivalents activated. The last one was activated on 1 March, three days ago. That process is happening for consumers. I hope that that has reassured both my hon. Friend the Member for Braintree and the hon. Member for Walthamstow.

Stella Creasy: Yes, that is very helpful. Our only concern was to put the matter into legislation, and the regulations give it the full force of the law by saying that such things lead to consumer detriment. I take the Minister’s point that the regulations have not come into play as yet. It would be helpful to know that she will keep the matter under review. I am not sure other Departments are as good as BIS in making sure that the lines move over. There has been real concern throughout the House about the Department for Work and Pensions lines, so it would be good to know that there is a watching brief on this issue, because it is a concern for consumers, but I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stella Creasy: I beg to move amendment 57, in clause54,page31,line34,at end insert—
‘(3A) Where the conduct of the service can be reasonably considered to lead to a risk to the personal safety of the consumer, the consumer has a right to—
(a) a full refund of the cost of the contract, and
(b) any additional fees associated with the service.
(3B) Any action taken under subsection (3A) will not prevent the consumer from seeking other remedies or further compensation for the consequences of this installation.’.
This is another amendment that will be eerily familiar to members of the Committee. It looks at the instances when somebody is exercising their rights to remedies. If there are times when they have lost all confidence in a trader providing a particular service, they should be able to get a price reduction, rather than having to go through a repeat performance. I have three examples that might explain where we are coming from. These are instances where someone would reasonably have lost all confidence.
A builder creates an extension, but their work causes so much damage to a load-bearing wall that they leave the house in a dangerous state. They clearly do not understand the laws of physics. A hairdresser uses a particular treatment that causes someone to have a severe allergic reaction, even though the consumer has been clear that they have sensitive skin, and the hairdresser has not pre-tested the dye. A gas fitter services a boiler and either causes a gas leak or fails to notice a serious problem that puts the consumer in grave danger. In those circumstances, rather than having to request a repeat performance, a consumer should simply be able to say, “I just want my money back or a price reduction. I don’t want to deal with you again, because I have lost so much confidence in you.” That is where the amendment is coming from.
If the Minister thinks that there is already provision in the Bill for people not to have to receive a repeat service, but to be able to simply receive either a full refund or a substantial compensation through a price reduction, it would be helpful for her to set out where that is. As we saw before, there was a slight concern about a gap between having to seek a remedy through the courts and having a simple right for someone who has lost such confidence in someone else because they were such a bad trader that they did not need to go through the whole process again.

Jennifer Willott: The clause is crucial. One of the things that struck me when I came into this post is that there are currently no overarching statutory remedies for services. Services are such a massive part of our economy that that seemed quite a big gap to me. The clause will, for the first time, introduce remedies, a significant form of consumer protection.
I think we all agree that consumers should be protected from traders who endanger their personal safety. They should not have to allow those traders into their homes ever again if they have serious concerns about their own personal safety. That is why we are writing into law, in clause 54, the provision that consumers retain access to common law remedies. Therefore, if a consumer has been injured or feels that their personal safety has been endangered, they can access common law remedies, such as claiming for damages. There is already legislation in place to protect consumers and the general public from rogue traders, as well as strict legal requirements protecting individuals from personal injury such as the Health and Safety at Work, etc. Act 1974 and various building regulations. We therefore consider that there are sufficient existing legal mechanisms in place to protect consumers from the risk of personal injury.

Oliver Colvile: Will the Bill protect consumers from people from foreign countries who come into this country and work, for example, in dentistry, do not do a proper job, and then go back to Poland or another country, and therefore cannot be held to account for the damage that they have done? The reason I raise that is because a constituent of mine had exactly that issue, relating to implants. Perhaps the Minister would like to write to me afterwards.

Jennifer Willott: The hon. Gentleman took the words out of my mouth. I would like to write to him rather than answer him now. I shall ensure that I do so.
I hope that I have shown that there is an alterative route built into the law to provide, not just money back, but damages. I hope that, with that, the hon. Member for Walthamstow will feel able to withdraw the amendment.

Stella Creasy: All these issues are part of the question for the implementation group about when people will know which rights they have and whether they will know that in such deleterious circumstances they have that right. It would be welcome if the implementation group could look at how to ensure that, in those awful circumstances, people know that they do not have to go through the whole rigmarole.
On the basis that the principle that people can go straight to getting their money back when they think something has been so badly delivered is covered by the Bill, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Mr Gyimah.)

Adjourned till Thursday 6 March at half-past Eleven o’clock.
Written evidence reported to the House
CR 22 David Peacock
CR 23 Newspaper Society and the Newspaper Publishers Association